Will the WTO get crushed under an avalanche of bilateral trade deals?

Mint

15-05-2025

It's the season for trade negotiations and deals, going by the pace and number of deals struck over the last fortnight alone. After the India-UK trade deal that was announced on 6 May, we had the US-UK pact and then an interim one between China and America. With a little luck, we are likely to see India's deals under discussion with the US and EU reach fruition as well.
To be sure, the finer details of these accords are not yet known. But to the extent that they could cushion the impact of the trade war unleashed by US President Donald Trump, they count as good news. The flip side, however, is that they could sound a death-knell for the rules-based system of multilateral trade we have known since the World Trade Organization (WTO) was set up in 1995 to replace the General Agreement on Tariffs and Trade (GATT).
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As the youngest of the global institutions formed after World War II, the WTO stands apart from its siblings, the World Bank and International Monetary Fund. Unlike the Bank and Fund, whose voting rights are skewed in favour of advanced countries, with calls for reform having fallen on deaf ears, the WTO embodies a key principle of democracy: All members, rich and poor countries alike, are equal voters.
The WTO has had its share of critics and bashers. If its consensual approach to trade rules tested the patience of some, its dispute resolution mechanism evoked the ire of some others. The latter has effectively been in abeyance for years now, with the US blocking appointments to its appellate body with final adjudicatory authority.
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Still, at least on paper, any country can seek redressal if bullied by the trade-distortive tactics of another. Under WTO rules, for example, India has the right to levy retaliatory duties on US products for its unilateral tariffs on steel and aluminium. Also, unlike the GATT, the WTO deals not only with the exchange of goods across borders, but also services. In a world where research and technology play a vital role, the WTO's mandate covers intellectual property rights as well. Three decades ago, the wider world got access to cheaper drugs thanks to a pharma agreement.
The Global South also has a stake in two basic WTO principles: 'Most Favoured Nation,' under which a country cannot discriminate between trade partners (except via a free trade agreement), and 'Special and Differential Treatment,' which gives developing countries special rights and lets other members grant them favourable terms.
So, even as we celebrate signs that the world will escape the worst ravages of a tariff war, with the high seas looking less choppy for shipments, emerging economies must remember that our best interests lie squarely in multilateral cooperation. A rush for bilateral deals that are usually loaded in favour of richer partners—without clarity on how disputes can be resolved in the absence of an impartial technical body—is unlikely to serve us well over the long haul.
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In spite of this year's turmoil, we should pursue our larger goal of reforming the international trading system through lower barriers and revised rules. The Doha Round of WTO talks, launched in 2001, has led efforts in this direction. Sure, the US has halted its contributions to the WTO. But that's no reason for the rest of the world, especially developing countries, to give up on it.
Nobody needs to play second-fiddle to the advanced world. As recent events show, even the US can be forced to retreat from the trade war-front.