Beyond Trending: What is plurilateralism?

For instance, plurilateral deals within the framework of the WTO are fundamentally designed to bind only those member countries that choose to participate in them. In contrast, multilateral agreements are binding on all 166 member nations of the WTO. 

In the years following WWII, the General Agreement on Tariffs and Trade (GATT) was signed by 23 nations in 1947 to establish a rules-based world trading system. It sought to promote free trade and economic growth, reduce protectionism, and offer a platform for countries to negotiate trade agreements and resolve disputes.

Over time, the GATT evolved into the WTO in 1995. Although scholars differ on precise principles underpinning the GATT and WTO, Richard Baldwin, a Professor of International Economics, outlines one general and five specific principles. 

The general principle says that “the world trade system should be rules-based, not results-based”, which is implemented with five specific principles:

1) Nondiscrimination 

2) Transparency 

3) Reciprocity 

4) Flexibility 

5) Consensus decision-making

However, this rules-based system, premised on consensus, has been under stress due to various developments in global trade. 

Fragmentation of global trading system and developing economies

Although several reasons contributed to the logjam at the WTO, the failure of the Doha Round launched in 2001 is a turning point in the crisis in the multilateral trade organisation. The Doha Round attempted to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. 

But its failure is seen as paving the way for plurilateral arrangements, with like-minded countries resorting to such arrangements to advance trade liberalisation. The approach gained further momentum in 2017 when the US blocked the appointment of judges to the WTO’s dispute settlement body – a key pillar of the rules-based trading system.

The ongoing geopolitical tensions, US President Donald Trump’s tariff policies, and growing protectionism are seen as other factors contributing to undermining this system. The proliferation of Regional Free Trade Agreements (RFTAs) is an example, whereby preferential trade agreements between two or more members are established. 

But RFTAs are seen as undermining the WTO’s core principle of non-discrimination among members, which, in turn, contributes to the fragmentation of the global trading system. This has raised concerns among developing countries like India about the growing fragmentation and the potential marginalisation of developing economies. 

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