Lamy was speaking at a recent event in New Delhi titled, “WTO MC14 Outcomes and the Future of the Multilateral Trading System”, jointly organised by think tanks CUTS International and the Chintan Research Foundation.
Lamy made the case that reforming the WTO is not only about reforming the rulebook (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 also pointed out that today, protectionism is decreasing and “precautionism” is increasing. The specificity of the US in terms of cyclical protectionism was highlighted as an exception.
Regarding precautionism in international trade, he highlighted that the problem is not about more regulation, but about discrepancies in regulation.
“Risks to human, animal, plant and planetary health are all increasingly inter-linked. While such issues will impact the WTO, their solution may not lie within its architecture,” Lamy said.
Shashi Tharoor, MP, who chaired the session, highlighted that this is a period of consequential churn in the global trading system, and that frictions at the WTO today run far deeper than the negotiating table.He said that these are a reflection of divergent national priorities in today’s geopolitics, indicating a shift from episodic negotiating deadlocks at the WTO to systemic strain.
Tharoor reminded the audience that multilateralism has rarely been an enterprise of dramatic breakthroughs. He said, “As history reminds us, periods of uncertainty may often serve as crucibles of renewal. The current challenges to multilateralism, though significant, are not insurmountable. The WTO may be imperfect, but it remains indispensable.”
Pradeep S Mehta, Secretary General, CUTS International, welcomed all and moderated the discussion. He spoke about their campaign: Trade, Not Just Aid: Winners and Losers of the WTO System (TRaNJA) which is steered by a 21 member international committee co-chaired by Shashi Tharoor and Pascal Lamy. Through a research based advocacy outreach around the world, it will seek to restore people’s faith in multilateralism and the WTO.
Mehta underlined that, “When consensus at the WTO becomes difficult, smaller groups of countries try to move forward on specific issues. This is “variable geometry” or coalitions of the willing. Simply put, it means that not everyone moves together at the same pace. Those who are ready, move ahead, while others join later. However, this does not mean that multilateral issues are not being discussed.”
Mehta admitted that while this approach has its risks, it is the need of the hour to keep the WTO system alive. In a situation where full agreement is hard to reach, Mehta noted that plurilaterals offer a practical way forward, allowing progress among willing members while gradually building greater consensus among the fuller membership. “It is highly difficult task to get an agreement through a membership of over 165 countries”.
Shishir Priyadarshi, President, Chintan Research Foundation,and co-host of the meeting, highlighted that transparency, predictability and fairness are the foundational issues for developing countries in the WTO system.
He unequivocally stated that, “The WTO is certainly indispensable, but its credibility is eroding. There are no viable substitutes for a rules-based system which provides such a strong voice to developing countries.”
Priyadarshi highlighted that for a system to deliver, it needs to have teeth. Referencing the dysfunctional WTO two-tier dispute settlement system, he pointed out that compliance with WTO rules had become obligatory rather than mandatory.
He underlined that balanced reform with inclusivity needs to be the way forward for the WTO. Priyadarshi emphasised that any conversation on WTO reform must keep development at its core. He called the WTO a guarantor of fairness in what remains an essentially unequal world.
A key area of discussion was around the WTO’s consensus based decision-making principle and plurilateral negotiations, particularly around India’s stance on plurilateral negotiations. It was highlighted that plurilaterals had emerged as an avenue for building some sustained momentum in an otherwise moribund WTO.
Montek Singh Ahluwalia, former Deputy Chairman, Planning Commission of India, highlighted that multilateral agreements are a form of mutual exchange of policy space. He said, “If we want to trade and economically integrate with the world, we cannot achieve a lot without conceding nothing. The key is to use the policy space intelligently, and negotiate correspondingly.”
There were differing views on how India should position itself on the WTO of the future. There was broad consensus on the need for adequate guardrails for negotiating and formalising plurilateral negotiation-based outcomes within the WTO rulebook.
Lamy also pointed out that the dispute settlement system being dysfunctional, India should consider joining the plurilateral Multi Party Interim Appeal Arbitration Arrangement, which includes 57 WTO members covering more that half of the global trade.
Former India’s Ambassador to the WTO and former Chairman of the dysfunctional Appellate Body: Ujal Singh Bhatia noted that this could be done, for example, through a framework agreement on plurilaterals to lay down basic rules such as eligibility criteria, development safeguards, and ensuring that plurilaterals do not marginalise non-participants or the larger systemic interest.
Many experts cautioned that unchecked proliferation of plurilaterals could lead to fragmentation and was not in the WTO’s intrinsic interest. They emphasised that flexibility in rulemaking (such as through plurilateral instruments) needed to be balanced with adequate safeguards and anchors within the multilateral system itself, so that the system does not erode.
Ahluwalia pointed out that it is time for India to ask whether it is better off opposing plurilateral talks at the WTO from the outside, or by being inside the room and participating in the negotiations? He also underlined that staying out of plurilateral negotiations does not align with India’s broader leadership ambitions.
Most experts opined that WTO reform must proceed with a clear understanding of the changed geopolitical and geoeconomic paradigm. The shift from interdependence and global economic integration to prioritisation of economic security, the systemic differences with China and the burgeoning Chinese production surplus spilling over into world markets, and the retreat of the US from its traditional role of underwriting the system were some of the aspects discussed in this regard.
Lamy and Tharoor supported the idea of the campaign on Trade, Not Just Aid (TRaNJA) being led by CUTS and said that it must be operationalized so that people at the grassroot and policy levels appreciate the value of WTO as an imperative for smooth international trade and buttressing multilateralism.
“We have floated the campaign with a ‘Friends of TRaNJA’ network and appeal to all to join it” said Mehta in an earnest plea at the meeting.
Indian Commerce Ministry’s Additional Secretary (in charge of WTO matters), Amitabh Kumar also attended the meeting.