Plurilateral agreements may help keep WTO relevant into the future

Earlier this month Ngozi Okonjo-Iweala, director general of the World Trade Organization (WTO), in her lecture at the London School of Economics, emphasised the need to speak up for the multilateral institution, particularly when the dominant funding economy has chosen to suppress its voice and relevance. Her statement augurs well for the WTO, which stands at a crossroads in terms of its fundamental processes and the objective of promoting freer and fairer trade. While there has been much talk about the United States  blocking appointments to the Appellate Body of the Dispute Settlement Mechanism, the decline of the institution, in terms of both long-drawn negotiations and a lack of substantive outcomes, has long preceded this development.    

 

It is well known that the expansion of membership of the WTO, from 23 founding members of the General Agreement on Tariffs and Trade (GATT), to 128 in 1994 when GATT transitioned to the WTO, to 166 in 2024, has not been without challenge. Consensus based resolution of significant issues such as agricultural subsidies, non-agricultural market access, and services liberalisation has been hard to achieve, given the varied interests and sensitivities of developed, developing, and least-developed member countries.

 

The agreements on trade facilitation and, more recently, on fisheries subsidies were concluded after prolonged and difficult negotiations, each stretching over more than a decade. While a persistent negotiating impasse on major issues has resulted in the WTO’s first and only trade liberalisation “round”, the Doha Development Agenda, being effectively suspended, most ministerial meetings have ended up with only administrative decisions related to the implementation of earlier agreements. The rules and provisions at the WTO have hence undergone limited, if any, evolution beyond what was achieved in the last round of GATT.  

 

However, the imperatives of evolving global trade, which is increasingly driven by global value chains (GVCs), have led to free trade agreements (FTAs) and issue-based plurilateral agreements (PAs) becoming the alternative routes for rule-making. The FTAs, permitted under GATT Article XXIV and involving liberalisation of “substantially all trade” among two or more member economies, have witnessed remarkable proliferation in the 21st century. From less than 100 in 2000, the number of FTAs notified to the WTO is well over 600 in 2025.

 

Along with an increase in their number, FTAs have also acquired greater depth, with most now encompassing a substantial number of higher-grade provisions related to intellectual property, investment and services liberalisation, and environment and sustainable governance (ESG). Once criticised for overlapping membership and consequent complexity of rules of origin across multiple FTAs, mega regional trade agreements, particularly those with common and cumulative rules of origin, have contributed to the ease of FTA utilisation for member economies. A large number of developing economies have been benefitted, through their participation in FTAs, and increased their integration with GVCs and their share of global trade.

 

The PAs, also under the aegis of the WTO, and initiated by a subset of like-minded member nations on specific issues or sectors, have however progressed at a much slower pace than FTAs. The first PA under the WTO was the Information Technology Agreement signed in 1996, whereby participating nations provided duty-free trade for a set of identified information technology products to all WTO members. In more recent times, though PAs on new-age policy areas such as e-commerce, investment facilitation, and alternative interim dispute settlement process have been initiated, participation of major economies and conclusive negotiations have been hard to achieve.

 

In fact, PAs have been contentious, as the interested subset of member economies initiating negotiations on a specific issue is sometimes considered as not fully representative of the entire WTO membership. Consequently, the exclusivity of PAs engenders apprehensions of possible power play in agenda-setting and the according of a first-mover advantage in rule-setting to participant nations. This is viewed not just as undermining the consensus -based approach of negotiations that is integral to the WTO, but also as negating the long struggle of developing countries post-Uruguay Round in establishing development as the avowed objective of the Doha Development Agenda while keeping “non-trade” issues at bay. However, much has since changed in the context of global trade.

 

Firstly, the underlying mechanism of the 21st Century GVC-led global trade needs to be understood as an inextricable nexus between liberalisation of trade in goods, investment and services. An appropriate set of rules and regulatory framework in each of these domains is therefore necessary to facilitate global trade.  Secondly, issues classified as “non-trade” by some economies, including India, and being resisted for negotiations under the PA route are already covered in greater depth in FTAs. For example, while plurilateral negotiations on investment facilitation are being challenged by some WTO members, investment chapters in most FTAs of the 21st century go well beyond investment facilitation to include deeper provisions on investment protection, investor-state dispute resolution, and intellectual property rights. Similarly, ESG-related provisions, many of which were long considered as non-trade issues, have seen a significant increase in FTAs in the 2010s. Thirdly, where PA negotiations do not take off or are long delayed, interested countries have opted for sector-specific bilateral agreements outside of the WTO. For example, US-Japan and Australia-Singapore signed a bilateral digital trade agreement in 2020. More recently, the EU and South Korea concluded a digital trade agreement in March 2025. Fourthly, we are in an era of growing protectionist unilateralism and trade policy uncertainty. There is, therefore, a greater need for consistency in global trade rules. 

 

Given these developments, it may be more appropriate to expend negotiating capital on defining the rules for participation and negotiation in these plurilateral formulations with “variable geometry,” rather than persist with a futile pursuit of elusive consensus-based decision-making processes at the WTO. This would require alternative mechanisms, perhaps in terms of determining a threshold share of global trade for nations initiating a discussion in a plurilateral formation, or in terms of a majority rule to identify issues that can be taken up for negotiation under the aegis of a plurilateral formulation. Simultaneously, an effort should be made to deal with the issues of legality in including PA-negotiated outcomes as rules in the WTO.

 

In order to prevent the WTO from being consigned to the sidelines, catering only to routine administrative measures on past agreements, and to assist its evolution in consonance with the imperatives of a fast-developing global trade context, a combination of alternative instruments — FTAs and PAs — is required. The latter entails serious cooperative efforts to redefine the decision-making process at the WTO. 

 

 

The author is professor, School of International Studies, JNU, and author of India’s Trade Policy in the 21st Century, Routledge: London, 2022.

 

The views are personal