Bilateralism Rises in Global Trade
- During Business Standard Manthan, held last week, Sitharaman, Union Finance Minister, mentioned how bilateral negotiations are becoming increasingly important as multilateralism is in decline.
- “Multilateralism is sort of out,” said Sitharaman, “and I think India should be looking more toward bilateral agreements in trade, investment and strategic relations.”
- This statement came at a time when the European Commission President was visiting India, leading to an expedited schedule for an EU-India Free Trade Agreement (FTA) in sync with India’s newly emerging trade policy.
The signing of such FTAs is indeed becoming critical for India in the arena of economic and strategic reorientation in the context of a changing global order.
Evidence for the Decline: Anti Multilateralism
Erosion of Global Institutions
- The WTO is weak
- It has not been able to deal with China’s covert export subsidies and has failed to provide a level playing field.
- Crisis of credibility for the WHO
- An increasing influence of major powers like China has raised concern over its credibility among others.
Retreat from Global Leadership by the U.S.
- Under Donald Trump, the U.S. left the Paris Climate Agreement and crippled the WTO’s appellate body, refusing to appoint new members.
- Tariff wars cargoed the global trade norms and coalesced country specific protectionist agonies.
All these changes, particularly chipping away at the national economy, as multilateralism, by its very design, had been offering protection to the weaker economies from the devours of the mightier cities. Since the status of multilateralism has veered toward a trajectory of fragmentation, bilateral agreements have become mainstream.
India’s Challenge: Strengthening Bilateral Enagements
Expand Bilateral & Plurilateral Engagements
- It ought to engage with plurilateral mechanisms, such as the Multi Party Interim Appeal Arbitration Arrangement (MPIA), at the WTO.
- Increased focus on engaging in regional and sectoral agreements would provide India leverage and better trade terms.
Strengthening the Capabilities for Negotiation
- The capacity and expertise of negotiators must be strengthened to work for India.
- Government ministries need to improve their interdepartmental cooperation in terms of streamlining the entire process of negotiation and implementation for trade.
Competitively Weighted Concessions
- India should actively work toward bilateral negotiations where it can offer strategically weighted concessions, rather than simple mechanisms that allow India to play veto politics with multilateral negotiations.
- Ultimate priority must be given here to wants put on market access.
