Plurilaterals without guardrails can fragment trading system: Experts
Lamy was speaking recently in New Delhi at an event titled “WTO MC14 Outcomes and the Future of the Multilateral Trading System” jointly organized by think tanks CUTS International and Chintan Research Foundation.
Lamy argued that reforming the WTO is not just about reforming the rule book (i.e., what the WTO does), but also about reforming the way the WTO is governed (i.e., how the WTO does what it does).
He pointed out that today, protectionism has decreased and “cautiousness” has increased. The specificity of the USA in terms of cyclical protectionism was highlighted as an exception.
Regarding prudence in international trade, he emphasized that the issue is not about more regulation, but about differences in regulation.
“Risks to human, animal, plant and planetary health are all increasingly interconnected. While such issues will impact the WTO, their solutions may not be embedded in its architecture,” Lamy said.
MP Shashi Tharoor, who chaired the session, underlined that this was a period of significant turmoil in the global trading system and that frictions in the WTO today go much deeper than the negotiating table. These, he said, are a reflection of different national priorities in today’s geopolitics and point to a shift from periodic negotiating stalemates at the WTO to systemic tension.
Tharoor reminded the audience that multilateralism is an initiative that rarely produces dramatic breakthroughs. He said: “As history reminds us, periods of uncertainty can often serve as crucibles of renewal. Current challenges to multilateralism, while significant, are not insurmountable. The WTO may be flawed but it remains indispensable.”
CUTS International General Secretary Pradeep S Mehta welcomed everyone and moderated the discussion. He spoke about the “Trade Not Just Aid: Winners and Losers of the WTO System (TRaNJA)” campaign run by a 21-member international committee co-chaired by Shashi Tharoor and Pascal Lamy. Through research-based advocacy activities around the world, it will seek to restore people’s faith in multilateralism and the WTO.
“When consensus becomes elusive at the WTO, smaller groups of countries try to move forward on certain issues. This is ‘variable geometry’ or coalition of the willing. Simply put, it means not everyone moves together at the same pace. Those who are ready move forward, while others join later. But this does not mean that multilateral issues are not discussed,” Mehta said.
Mehta admitted that there is an urgent need to keep the WTO system alive, although this approach has risks. In a situation where reaching full agreement is difficult, Mehta said multilateralism offers a practical path forward, allowing progress among willing members while increasingly building consensus among full members. “Achieving agreement through membership of more than 165 countries is quite a challenge.”
Shishir Priyadarshi, President of Chintan Research Foundation and host of the meeting, emphasized that transparency, predictability and justice are fundamental issues for developing countries in the WTO system.
He stated clearly: “The WTO is absolutely indispensable, but its credibility is being eroded. There is no substitute for a rules-based system that gives developing countries such a powerful voice.”
Priyadarshi underlined that for a system to be successful, it must have teeth. Referring to the dysfunctional WTO’s two-tier dispute settlement system, he noted that compliance with WTO rules had become mandatory rather than mandatory.
He underlined that balanced reform with inclusiveness must be the way forward for the WTO. Priyadarshi emphasized that any talks on WTO reform must keep development at its core. He described the WTO as a guarantor of justice in a fundamentally unequal world.
A major area of debate was around the WTO’s principle of consensus decision-making and multilateral negotiations, particularly India’s stance on multilateral negotiations. It was emphasized that multilateralism emerged as a way to create sustainable momentum in the otherwise moribund WTO.
Montek Singh Ahluwalia, former Deputy Chairman of the Planning Commission of India, underlined that multilateral agreements are a form of mutual exchange of policy areas. “If we want to trade with the world and integrate economically, we cannot achieve much without compromising anything. The important thing is to use the policy space wisely and negotiate accordingly.”
There were differing views on how India should position itself in the future WTO. There was broad consensus in the WTO rulebook on the need for adequate guardrails for negotiating and formalizing multilateral negotiated outcomes.
Lamy also noted that with the dispute resolution system dysfunctional, India should consider joining the multilateral Multilateral Interim Appellate Arbitration Arrangement, which includes 57 WTO members covering more than half of global trade.
This could be done through a framework agreement on multilaterals that sets ground rules, for example, on eligibility criteria, development safeguards, and ensures that multilaterals do not marginalize non-participants or larger systemic interests, said Ujal Singh Bhatia, India’s former Ambassador to the WTO and former Chairman of the dysfunctional Appellate Body.
Many experts have warned that the uncontrolled expansion of multilateralism could lead to fragmentation and that this is not in the WTO’s core interest. They emphasized that flexibility in rule-making (such as through multilateral instruments) must be balanced with adequate safeguards and pillars within the multilateral system itself, so that the system is not eroded.
Ahluwalia pointed out that it is time for India to ask whether it is better to oppose multilateral talks at the WTO from outside or to be present inside the chamber and participate in the negotiations. He also underlined that remaining outside multilateral negotiations was not compatible with India’s broader leadership goals.
Most experts were of the view that WTO reform should proceed with a clear understanding of the changing geopolitical and geoeconomic paradigm. The shift from interdependence and global economic integration to prioritizing economic security, systemic differences with China and the expansion of China’s growing surplus production into world markets, and the withdrawal of the United States from its role of financing the traditional system were some of the issues discussed in this context.
Lamy and Tharoor supported the idea of Trade Not Just Aid (TRaNJA) campaign run by CUTS and said it should be operationalized so that people at grassroots and policy levels appreciate the value of WTO as an imperative for smooth international trade and promotion of multilateralism.
Making a solemn request at the meeting, Mehta said, “We have launched the campaign with the ‘Friends of TRaNJA’ network and urge everyone to join it.”
Amitabh Kumar, Additional Secretary, Ministry of Commerce, India (in charge of WTO matters) also attended the meeting.
