The 14th WTO ministerial conference held in Yaounde, Cameroon, in March didn't fail to disappoint. The usual North-South divide emerged on the protection of agriculture. Discussions on how to discipline industrial subsidies, a core area of contention between China and the West, were not even tabled. A roadmap for institutional reform remained elusive.
But running through all these individual failures was a deeper philosophical divide on how to move forward: via redoubled efforts to command a multilateral consensus, or via plurilateralism, with groups of like-minded countries striking agreements on particular issues. And, here, India planted its flag squarely on the multilateralist side.
Consider what multilateralism, at its best, delivered. The crown jewel of the WTO system is its MFN principle - the rule that any concession a country grants to one trading partner must be extended automatically to all others. If Australia reduces its tariff on French wine, it must offer the same reduction to Chilean wine, Indian wine, and wine from every other WTO member. This simple but radical idea transformed a world of bilateral deals and beggar-my-neighbour tariffs into something approaching a genuinely open global trading system.
Over 8 rounds of multilateral negotiations, average tariffs on industrial goods fell from more than 20% in the immediate post-war period to below 4% by the early 2000s. The number of participating countries expanded from 23 to 166. Hundreds of millions of people in the developing world gained access to export markets, hastening their escape from poverty.
India has long argued that plurilateral agreements - deals struck among a subset of WTO members - threaten this achievement. Jagdish Bhagwati spent decades warning that proliferation of preferential trade agreements was turning the global trading system into a 'spaghetti bowl' of overlapping, contradictory rules that discriminated against non-members, diverted trade rather than creating it, and undermined multilateralism.
For Bhagwati, bilateral and plurilateral deals were stumbling blocks on the road to genuine free trade, not building blocks toward it. India's position at Yaounde - blocking adoption of Investment Facilitation for Development (IFD) Agreement and resisting the plurilateral ecommerce framework - reflects that line of thinking.
Set aside the fact that India's position would be more convincing if it were actually leading an attempt to repair the multilateral framework, and if it were not engaged in signing a flurry of bilaterals itself. The main problem is that the world Bhagwati was writing about no longer exists. There has been no meaningful advance in multilateral trade negotiations since launch of the 'Doha Round' in 2001.
WTO's dispute settlement system has been effectively neutered since 2019. And the US has imposed sweeping tariffs that openly violate WTO rules, while simultaneously declaring that the organisation will play only a 'limited role' in its future trade policy.
Against this backdrop, the relevant question is not whether plurilateralism is better than multilateralism in some ideal world, but whether it's better than nothing. India's digital services sector is one of the most dynamic in the world. Yet, the country remains outside the plurilateral framework on ecommerce now being implemented by 66 WTO members covering 70% of global trade. Its manufacturers are eager to integrate more deeply into global value chains, an ambition that requires the kinds of rules on investment facilitation that plurilateral agreements might provide.
What should India do, instead? Rather than opposing plurilateralism on principle, it should engage with it strategically, with the goal of shaping plurilateral agreements so that they preserve as much of the WTO's multilateral spirit as possible. We suggest three rules of thumb to guide this engagement:
India should favour MFN-based plurilaterals over discriminatory ones. An agreement that extends its benefits to all WTO members, whether or not they are signatories, captures many benefits of true multilateralism while allowing a willing coalition to move ahead.
The practical constraint is that MFN plurilaterals are most viable when the participating coalition is large enough to limit free-riding. India's active participation could often be precisely what tips a coalition across that threshold.
India should insist on open plurilaterals - agreements designed from the outset to allow non-signatories to join on straightforward terms at any future point. Open agreements, such as the ecommerce framework adopted at Yaounde, preserve the possibility of eventual universalisation.
India should prefer plurilaterals housed within WTO to those negotiated outside it. WTO provides transparency, monitoring, and a legal infrastructure that agreements struck in other forums cannot easily replicate. Keeping plurilaterals within WTO also allows an institutional pathway for expanded membership.
India spent much of its post-independence history being shaped by rules of an international economic order it had little hand in designing. It now has the economic heft, diplomatic reach and institutional knowledge to be a genuine rule-shaper.
The multilateral trading system, battered and bruised as it is, sorely needs defenders. But it needs defenders seated inside the room when the rules are written, not outside it nursing a principled grievance.
Aiyar is director, ICRIER, and Aggarwal is former chief, trade policy and trade facilitation, International Trade Centre, Geneva
