The Irish poet W.B. Yeats wrote that when things fall apart, the centre cannot hold. The Doha round has finally fallen apart. What, if anything, can hold the WTO and the multilateral trading system together?

Much more trouble lies ahead. The WTO is in seemingly inexorable drift – away from the hard politics of trade liberalisation and the rules that underpin it. Serious players will switch further to preferential trade agreements (PTAs); and they will be tempted to flout existing multilateral rules.

In essence, the WTO suffers from severely diminishing returns. In contrast to the GATT, it has a bigger, messier, politically more controversial agenda, shot through with multiple and contradictory objectives. And decision making is crippled in a general assembly with near-universal membership. These are symptoms of the "UN-isation" of the WTO.

To get the WTO out of its rut after Doha, its members need to do three things: restore focus on a core trade-liberalisation agenda; revive effective decision making; and, not least, scale back ambitions and expectations.

Workable decision making depends mostly on intergovernmental political will, not on formal procedural changes. This demands recognition of hard-boiled realities outside Geneva. About 50 countries – the OECD plus 20-25 globalising developing countries -- account for almost 90 per cent of international trade and FDI. They must do the deals. An inner core of "big beasts" -- the USA, EU, India, China and Brazil – must exercise leadership. Otherwise nothing will move.

The other two-thirds of the membership (about 100 countries) have very marginal involvement in the world economy, bad-to-terrible governance and scarce negotiating resources. Frankly, they cannot play more than a secondary and reactive role. Providing they do not block negotiations, they should be given a free ride through generous Special and Differential Treatment.

Last, the WTO needs to adapt to a more modest future. Market-access and rule-making negotiations should be cautious and incremental; and trade rounds should probably become a thing of the past. There should be more emphasis on the everyday tasks of improving policy transparency and administering existing rules better. And dispute settlement should not degenerate into backdoor lawmaking.

These, arguably, are the preconditions for the WTO to serve its core purpose: to be a helpful auxiliary to governments, particularly in the developing world, that have made a strategic choice in favour of markets, competition and global integration. The alternative is a permanent state of UN-style infantilism.

Are PTAs (preferential trade agreements) more desirable than a stalled WTO? Not really. Most are bitty, quick-fix sectoral deals bedevilled by mind-bogglingly complicated and restrictive rules-of-origin requirements. They are driven by symbolic copycatting of others' PTAs and otherwise empty gesture politics. And they deflect attention from sensible unilateral reforms and the WTO.

Hence PTAs, in addition to the WTO – indeed trade negotiations generally – have severe limitations. They are probably not going to tear down the remaining protectionist barriers that matter. The remedy, rather, lies primarily with unilateral liberalisation and regulatory reform. This is the Nike strategy: governments "just do it"; they liberalise independently and voluntarily outside trade negotiations.

Bottom-up unilateral liberalisation is patchy and uneven: it is not a total substitute for multilateral rules. But it is the best liberalising engine on offer. The World Bank estimates that, since the 1980s, about 65 per cent of developing-country tariff liberalisation has come about unilaterally. This is especially true of east Asia, with China now the pace-setter. It is Chinese unilateral liberalisation, not the WTO or PTAs, that will probably spur a pickup in trade-and-FDI liberalisation in Asia and beyond.

So much for scenario painting. What policy implications follow?

First, in the WTO, a group of about 50 "adult" members should explore ways of reviving negotiations on core market access (agriculture, industrial goods and services) and rules (such as anti-dumping procedures and subsidies), though in a restricted plurilateral setting and not as part of another "round". Negotiated concessions should be extended to the rest of the WTO membership via the Most-Favoured-Nation clause. Negotiations on newer regulatory issues could proceed among smaller groups of willing and like-minded members.

Getting such initiatives going will require cooperation among the Big Beasts, and invariably US initiative and leadership. Barring a global economic crisis, that will not be forthcoming soon. A John McCain presidency might be its best prospect. A plurilateral track will also need to be insulated from noxious influences in the WTO: anti-market governments, old-style protectionist interests and new-style NGOs.

Second, new PTA initiatives should only be launched with caution and a sense of economic strategy. Two new initiatives come to mind. One is a transatlantic free trade area. This should aim to abolish all tariff and non-tariff barriers at the border, make serious progress on eliminating other regulatory trade barriers, and have simple, liberal and harmonised rules of origin. Gordon Brown should think of this as a major foreign-policy initiative when he assumes the British premiership.

The other is an EU FTA strategy for Asia, starting with Southeast Asia. This should avoid the temptation of quick and dirty FTAs and aim for genuine, least-restrictive liberalisation (e.g. through comprehensive coverage, strong transparency disciplines and liberal rules of origin).

Are such serious FTA initiatives likely? The wish is father to the thought. Sadly, Doha round failure will probably accelerate the Gadarene rush to do more "trade-light" FTAs full of political gimmickry and phoney economics.

Third, and most important, it is vital that the Asian – particularly Chinese – engine of unilateral liberalisation does not stall. That depends on internal conditions in China, and increasingly in India too. But it also depends on a clement external macroeconomic and trade environment. Thus the US and EU must strengthen Òconstructive engagementÓ with the rising Asian powers across a broad range of foreign and economic-policy issues, while containing belligerent and protectionist forces at home. This is more a matter of unilateral example-setting and bilateral cooperation than of trade negotiations.

Finally, where does this leave Southeast Asia? The ASEAN countries, like Japan and South Korea, have been more spectators than players in the Doha round. They have been preoccupied with – mostly trade light – PTAs. More by omission than commission, they must share the blame for letting the round fail and for undermining the multilateral trading system. This was extremely myopic, and may prove to be a monumental miscalculation. The region needs an effective WTO. Its life-blood is a liberal trading system with strong, non-discriminatory rules. An alternative patchwork of overlapping and discriminatory PTAs is not enough and probably damaging.

Hence, once the dust settles, ASEAN members must be active in that outer core of about 50 countries to set the WTO on its legs again. At the same time, they should clean up existing PTAs and refrain from negotiating new dirty PTAs. Above all, they should revive unilateral liberalisation and associated regulatory reforms to boost competition. That is vital to keep up with China. And that, more than all the ASEAN and wider regional Visions, Blueprints and Charters put together, will advance regional and global economic integration.