The Crisis of Multilateralism: Trumpism and the Fragmentation of Global Trade
hindu
The evolution of international trade agreements is currently at a crossroads, moving away from the rules-based multilateralism of the World Trade Organization (WTO) toward a more transactional, bilateral approach often associated with 'Trumpian' trade policy. Historically, the General Agreement on Tariffs and Trade (GATT) and the WTO provided a predictable framework based on the 'Most Favored Nati
The evolution of international trade agreements is currently at a crossroads, moving away from the rules-based multilateralism of the World Trade Organization (WTO) toward a more transactional, bilateral approach often associated with 'Trumpian' trade policy. Historically, the General Agreement on Tariffs and Trade (GATT) and the WTO provided a predictable framework based on the 'Most Favored Nation' (MFN) principle. However, recent trends show a preference for sector-specific deals and 'plurilateral' agreements that often bypass the WTO's dispute settlement mechanism. This 'legal suspicion' arises because many of these new-age deals do not meet the stringent requirements of GATT Article XXIV, which allows for regional trade agreements only if they cover 'substantially all trade.' The analysis indicates that this shift leads to a fragmented global economy where trade is used as a tool for geopolitical leverage rather than mutual economic efficiency. For India, this presents a dual challenge: it must protect its interests at the WTO while simultaneously engaging in 'Early Harvest' deals and Comprehensive Economic Partnership Agreements (CEPAs) with key partners like the UAE and Australia to stay competitive. The erosion of the WTO's authority could lead to increased protectionism and trade wars, which would be detrimental to developing economies that rely on stable global markets.
Crucial for understanding the changing nature of globalization, the challenges to the rule-based international order, and India's trade policy strategy.
GS Paper 2: Important International institutions, agencies and fora - their structure, mandate; Effect of policies and politics of developed and developing countries on India's interests.