Multilateral and Plurilateral Agreements

When the last round of multilateral trade negotiations was launched in Doha in 2001 with the explicit aim of assisting developing countries, the concept of a single undertaking from previous negotiations, known as the Uruguay Round, was adopted. However, the Doha Round failed because of the refusal of all parties to make consensual concessions. Developing countries did not want to reduce their applied tariffs or eliminate "water" between their bound (authorized) and applied (actual) tariffs. The industrialized countries, for their part, did not want to set their applied tariffs at zero or reduce the intellectual property disciplines agreed in the Uruguay Round. Bilateral and regional free trade agreements are – prima facie – incompatible with the WTO`s most-favoured-nation principle65 because the parties concerned grant each other preferential advantages over the conditions offered to other trading partners. In fact, free trade agreements between two or more parties comply with WTO rules as long as they meet certain requirements, such as.B. coverage of "virtually all trade"66 and notification to the WTO. Nevertheless, the United States continues to act on WTO terms with the majority of its trading partners. About 65% of U.S. trade is with countries/regions with which it does not have free trade agreements62 – this includes some of the U.S.`s major trading partners such as the EU, China, and Japan (although the latter two have recently concluded limited agreements with the United States). A more subtle argument, and I give credit to my trade colleague Scott Miller, for explaining this argument, is that plurilateral agreements prevent countries from making multilateral concessions.

For example, if you are in Vietnam and as a result of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), you now have zero tariffs with Japan (and other partners) on a wide range of items, you are much less interested in a multilateral agreement that lowers tariffs for everyone because it has the advantage you have with Japan. would be watered down. There are benefits to being in the tent, so to speak, but the more people let them into the tent, the more your particular advantage will be reduced. A plurilateral agreement is a multinational legal or trade agreement between countries. In economic jargon, this is an agreement between more than two countries, but not many, that would be a multilateral agreement. [1] To further complicate matters, some plurilateral initiatives among WTO Members take place outside the WTO framework. In 2013, for example, negotiations on the Trade in Services Agreement (TiSA) were launched between 23 WTO members, including the EU and the UNITED States. Together, these parties account for 70 per cent of world trade in services. The ISA argument suffers from three errors. First, the term "consensus only" in Article X.9 applies only to agreements listed in Annex 4.

Other members do not propose to include their plurilateral arrangements, known as Joint Declaration Initiatives (JSIs), in Annex 4. Second, the multilateral nature of the WTO does not imply uniform rights and obligations among WTO Members. In fact, when it was established, the General Agreement on Tariffs and Trade (GATT) 1947 contained special provisions for preferential arrangements between Members prior to GATT. As the GATT evolved and was subsequently replaced by the WTO, special and different conditions were added to take account of developing countries. Third, Article IX.2 of the Marrakesh Agreement states in part that, in order to update the rules-based architecture, countries have a variety of negotiating approaches, both within and outside the WTO. These are multilateral negotiations, bilateral/regional negotiations and plurilateral negotiations. Building on the existing multilateral system, USMCA parties could focus on issues that expand the current rules. RCEP was negotiated in the same way to be consistent with the WTO, and its Chapter 12 on e-commerce is considered the most likely route for the WTO negotiations on e-commerce. Conversely, South Korea`s separate free trade agreements with the European Union and the United States have codified two sets of rules that are mutually inconsistent with respect to international standards, resulting in fragmentation of rules. In the recently launched e-commerce negotiations (Box 1), India`s decision not to participate in the talks raises questions about the legitimacy of trade agreements that do not involve major emerging economies. The rise of bilateral and regional trade agreements, through which two or more countries promote free trade and investment among themselves, is partly due to discontent with the WTO`s broken negotiating arm since the conclusion of the Uruguay Round in 1994. The WTO negotiations have adopted the `single undertaking` approach: "Virtually every point of the negotiations is part of a comprehensive and indivisible package and cannot be agreed separately." This approach has advantages that led to the successful conclusion of the Uruguay Round: it bans stowaways and Member States can compensate for concessions made on one point with concessions in another area.

The success of the WTO`s predecessor, the General Agreement on Tariffs and Trade (GATT), is now one of the main reasons for multilateral difficulties. GATT began in 1948 with 23 members agreeing to reduce tariffs. Tariff reductions were at the heart of the negotiations until the Uruguay Round in 1986, in which 123 members were represented. A reduction in tariffs from about 22% of the value of commodities in 1947 to 5% after the Uruguay Round is indicative of the success of the GATT negotiations. Nevertheless, like-minded countries that continue to negotiate further trade integration are good news. Faced with the collapse of multilateral traffic, plurilaterals are the most realistic instrument for trade progress. The risk to the multilateral system arising from external plurilateral APTs is differentiated integration and fragmentation of governance. Current geopolitical tensions increase this risk.

Although this risk cannot be completely avoided, it can be mitigated. If you believe in the theory of the bicycle trade - that if you no longer pedal, the bike will fall - then you want to make progress - keep the bike moving - and for now, that means plurilateral. The irony, however, is that we can be trapped in a loop. We resort to plurilateral because multilateral negotiations do not seem feasible, but plurilaterals themselves make broader negotiations less attractive. The legal arguments in support of the Indo-South African objections are erroneous. Their objections are more than narrow-minded. They jeopardize the future of the WTO as a negotiating forum for all plurilateral talks. These talks must continue in order to revive the much-maligned WTO as an institution, for the benefit of all WTO members – but especially those without close trade ties with the major economic powers. In addition, these negotiations can provide important platforms for cooperation on other issues at the frontier of technological change in the global trading system. The EU has called for "flexible multilateralism" within the WTO – support for comprehensive multilateral negotiations where possible, while actively supporting and continuing negotiations on open plurilateral agreements in areas where multilateral consensus is not possible.75 The European Commission under The presidency of Ursula von der Leyen hopes to "give new impetus to the WTO negotiations on e-commerce". 76 Phil Hogan, the former EU Trade Commissioner, also called for "mechanisms to facilitate the integration of plurilateral approaches into the WTO".77 The curve has slowed in recent years, but the trend is obvious and coincides with the difficulties of the Doha Round.

In 2001, 91 cumulative regional trade agreements were in force, of which 305 are present. This certainly suggests that the failure of one has influenced the success of the other, but it does not mean that we have to choose. It makes sense to continue efforts towards multilateral agreements, but in the knowledge that failure is likely to lead to more regional agreements. This doesn`t mean that Europeans aren`t Pharisees, but it does suggest that it might be a smart policy to pursue both paths at once. .