Jagdish Bhagwati is one of the world’s most distinguished economists. Currently a university professor at Columbia, Mr. Bhagwati is a rare academic who has the great ability to communicate his ideas to a more general audience. In works such as his recent book, “In Defense of Globalization,” Mr. Bhagwati has become famous as a persuasive and articulate proponent of expanding world trade to help improve the lot of the poor. In “Termites in the Trading System,” Mr. Bhagwati argues that not all trade deserves our equal support, however, and mounts a brisk and spirited attack on preferential, so-called “free trade” agreements that are, in his view, leading the world trading system astray.

Wait a minute: Aren’t these agreements — such as NAFTA — almost invariably opposed by anti-trade groups precisely because they open up markets? Why is one of the world’s staunchest supporters of free trade protesting so passionately against this method of reducing trade barriers?

The problem, Mr. Bhagwati shows, is that not all trade agreements are created equal. The right way to reduce trade barriers, he explains, is on a multilateral basis and in a nondiscriminatory way. After World War II, America led the world in creating the General Agreement on Tariffs and Trade (GATT), which did just that, by encouraging the reduction of tariffs and liberalization of other import restrictions. In recent years, however, countries have increasingly bypassed this system. Now, it is common for two or more countries to agree to eliminate tariffs and reduce other trade barriers for each other, but not for others, as is the case with NAFTA. Such agreements have been in vogue around the world, particularly with the current Bush administration: Under Bush, America has concluded a major trade agreement with Central American countries (CAFTA) and a series of bilateral agreements with countries ranging from Oman to Australia, and — most recently and controversially — Colombia.

The main problem with these bilateral and regional agreements is that they exclude other countries. In Mr. Bhagwati’s view, they are more accurately called “preferential” trade agreements because they discriminate against non-participating countries. This is a violation, Mr. Bhagwati suggests, of the principle of nondiscriminatory trade liberalization that served as the cornerstone of the tremendously successful post-World War II trading system under the GATT (and now the WTO).

By introducing discriminatory treatment into the trading system, the movement toward preferential trade agreements sacrifices economic efficiency and, perhaps more troublingly, throws the carefully constructed postwar system into disorder. Instead of having one common multilateral system, we now have a bewildering array of complex and overlapping bilateral and regional agreements, each with conflicting and contradictory provisions regarding trade in goods and services. Mr. Bhagwati, always quick with an illuminating metaphor, has referred to this as the “spaghetti bowl” system, in which these agreements create a tangled mess of restrictions and regulations, ultimately disrupting rather than promoting free trade.

Thus, Mr. Bhagwati is by no means anti-trade or anti-trade agreements; instead, he makes a strong case for opening trade much more aggressively at the multilateral level — with all-inclusive and nondiscriminatory agreements. (Curiously, however, he says little about unilateral moves toward freer trade, a topic of great importance on which he has written elsewhere. After all, if free trade is so good, countries should be willing to move in that direction by themselves without waiting for international cooperation.)

There is little doubt that Mr. Bhagwati is right in his preference for multilateral and universal agreements, but he does not resolve the problem faced by those who support free trade but lack his sophisticated and nuanced understanding of economics — and who may need to take a position on bilateral agreements that serve to promote certain kinds of trade but only by discriminating against others. For example, how should one think about the America-Colombia Free Trade Agreement that is currently being held in the House of Representatives? Mr. Bhagwati would presumably oppose this preferential trade agreement on the principled grounds that it will have a small but corrosive effect on the multilateral WTO system. But the main opponents object to it simply because they object to almost any measure to reduce trade barriers. Should one join with the anti-trade left and oppose the agreement on the basis of Mr. Bhagwati’s arguments? Or should one support the agreement as a way of helping President Alvaro Uribe in his government’s efforts to strengthen the economy and fight the corrupting influence of drug lords and meddling by Venezuela’s Hugo Chavez?

As the Colombian example suggests, many “free trade” agreements are motivated by foreign policy considerations. Mr. Bhagwati writes that countries continue to pursue preferential trade agreements because there is “widespread intellectual failure to understand the critical distinction between freeing trade in discriminatory and nondiscriminatory ways,” and because politicians, he says, have an “imperviousness to reason.” An alternative hypothesis is that politicians are not seeking to enhance economic efficiency or improve the world trading system, but have other, political objectives in mind.

In the end, Mr. Bhagwati concedes that “halting the formation of [preferential trade agreements] is no longer a possibility.” He pins his hopes on mitigating their adverse effects on trade by reducing overall trade barriers to such an extent that preferences and discrimination do not matter all that much. That in turn depends upon future unilateral efforts at trade liberalization and further progress at the WTO.

Mr. Bhagwati’s concise book of just 100 pages of text should be read by all who care about the world trading system today. “Termites” may be a bit challenging for those new to the trade policy debate, but it is written with a light touch, with many amusing stories, examples, and effective argumentation that make it, above and beyond its policy significance, a genuine pleasure to read.

Mr. Irwin is professor of economics at Dartmouth College and author of “Free Trade Under Fire.”