For the World Trade Organization (WTO) to remain relevant in world trade, it must supplement the traditional approach of only pursuing multilateral agreements by embracing plurilateral agreements on important trade topics. Although plurilateral agreements should not replace multilateral agreements all together, they should be used for pressing trade issues to ensure the WTO stays relevant in world trade.
Introduction:
Despite the grand expectations the world had for the WTO to help invigorate free trade among countries, the reality is that the current WTO multilateral system is inefficient. Unfortunately, only a handful of multilateral trade agreements have been agreed to since WTO’s establishment in 1995[1] and the Doha Round showed that relying on multilateral trade agreements alone is a thing of the past.[2] However, this does not mean that the WTO must re-order its approach to international trade. Instead, the WTO must simply pivot its approach to something it has already done but has long since forgotten: plurilateral agreements. “The plurilateral agreements of the WTO are found on Annex 4 of the Marrakesh Agreement.”[3] These agreements govern instances “… where certain member states may agree on rules on trade in specific subjects that not all Member States may agree to.”[4] Despite the WTO seemingly abandoning the use of these plurilateral trade agreements, the WTO knows they will work because there are currently two plurilateral agreements in the WTO that have been in existence since the Tokyo Round[5]: Agreement on Trade in Civil Aircraft and the Agreement on Government Procurement. These are some of the most long-lasting agreements within the WTO, and as such could be argued to be the most successful. Not only do these plurilateral agreements prove that they can be successful within the WTO, but they also show that the WTO already has guidelines regarding plurilateral agreements. This means that the WTO may permit future plurilateral agreements in important areas of trade immediately, without establishing a new framework nor engaging in time consuming discussions about whether to allow these types of agreements. The WTO has all the tools it needs to allow plurilateral agreements, all it needs to do is start using them. The only question that remains then, is whether the WTO should begin using plurilateral agreements once more.
Plurilateral Agreements:
The global economy depends on a strong multilateral system.[6] And in a perfect world, this would be enough. However, global cohesion does no good if no new agreements are being made. Because we live in an imperfect world, achieving a multilateral system must be done by other means. Currently, under a strictly multilateral system, for the WTO to adopt a trade agreement, consensus of 164 WTO member countries (“members”) is required.[7] The pitfalls of obtaining a consensus among this many different parties, especially considering the variable economic, cultural, and political objectives/circumstances of each party, are alarming. “As an alternative … it makes practical sense on many issues for WTO members to move forward instead within the WTO legal framework through plurilateral agreements on such topics as digital trade and investment facilitation among some, but not all, the WTO membership.”[8] This will allow those members who want to facilitate trade to do so under a plurilateral agreement, without being hindered by those members who do not want to participate in that trade agreement. Some may argue that adopting this approach contradicts the very objectives the WTO was founded on, to ensure international cooperation in world trade, because it forms alliances between only a few members. However, plurilateral agreements do not block once unwilling members from joining the agreements later, but simply allow progress to be made amongst willing members. It is essential that the WTO implement plurilateral agreements “… to be open to any WTO member that wishes to join them. The aim should be to expand these plurilateral agreements over time into fully multilateral agreements that include all WTO members, which is legally permissible under the WTO treaty and has been done successfully in the past.”[9] Therefore, plurilateral agreements offer the WTO an opportunity to address vital trade areas with efficiency by facilitating trade among willing members and supporting the WTO in continuing its goal of global trade cohesion by allowing once unwilling members to join later.
If plurilateral agreements had a slogan, it would be “some progress is better than none at all”. Countries are currently being pushed to engage in trade agreements on important and new trade topics, regardless of whether the WTO can produce a multilateral trade agreement on the topic, because economies do not stop simply because members cannot meet a consensus to create a multilateral trade agreement. The result is that world trade is more and more so existing outside the control of the WTO. For instance, Australia and Singapore, although both WTO members, entered into the Digital Economy Agreement (DEA)[10] outside of the WTO. The DEA is the perfect example of the reality that countries need trade, and they need regulation on that trade. If the WTO will not provide this, countries will be forced to do it themselves, just as Australia and Singapore did. Unfortunately, the more plurilateral agreements entered outside of the WTO, the less regulation these agreements will have to avoid protectionist objectives.[11] This is because the WTO was created to liberalize trade and has a robust set of rules that members must follow when entering into a trade agreement that ensure such trade agreements do not unfairly benefit one country over another. Because agreements made outside of the WTO need not conform with these rules, such agreements risk serving protectionist goals. Each trade agreement entered outside of the WTO therefore increases the chance that international trade may revert to that of trade prior to 1945, which resulted in limited trade stemming from protectionism among international actors.[12] In order to avoid this, the WTO needs to wake up. A plurilateral system may not be perfect, but it allows progress where progress is needed, and a way for the WTO to ensure international trade stays more open and regulated than not. Not only this, but the possibility of plurilateral agreements within the WTO to become multilateral agreements as countries negotiate and agree to join means that multilateral agreements will not be forgotten. Instead, while multilateral agreements wait to be formed, progress can still be made between the joined members and allow considering members the time to negotiate without inhibiting trade regulation. While multilateral agreements mean that members in agreement cannot begin trading until unsure members decide, resulting in frustration amongst themselves and a stagnation of trade, plurilateral agreements ensure more consistent movement of trade and less friction between decided and undecided countries.
Conclusion:
Plurilateral agreements can work with the multilateral system to fix the current lag in international trade agreements, keeping WTO relevant and supporting international trade cohesion. The WTO adopting plurilateral agreements does not mean no more multilateral trade agreements will be reached, but instead this strategy provides more flexibility to ensure those countries ready to trade can begin and guarantees such trading is within the discretion of WTO regulation.
[1] James Bacchus, The Future of the WTO: Multilateral or Plurilateral?, CATO Institute (May 25, 2023) The Future of the WTO | Cato Institute.
[2] Roula Khalaf, The Doha round finally dies a merciful death, The Financial Times(December 21, 2015) The Doha round finally dies a merciful death (ft.com).
[3] LexisNexis, An introduction to plurilateral agreements of the WTO, LexisNexis (March 11, 2021) An introduction to plurilateral agreements of the WTO | Legal Guidance | LexisNexis.
[4] Id.
[5] W.T.O. Agreement on Trade in Civil Aircraft, Jan. 01, 1980, annex. 4, 2 U.N.T.S. 181; W.T.O. Agreement on Government Procurement, annex 4, 2 U.N.T.S. 7.
[6] Ralph Ossa, A strong multilateral trading system is essential for economic security. Here’s why. World Economic Forum (June 9, 2023) Here’s why we need a strong multilateral trading system | World Economic Forum (weforum.org).
[7] See Bacchus, supra note 1, See also Bernard Hoekman, et al., Delivering Plurilateral Trade Agreements within the World Trade Organization 6 (2021).
[8] Bacchus, supra note 1.
[9] Bacchus, supra note 1.
[10] Australian Government Department of Foreign Affairs and Trade, Australia-Singapore Digital Economy Agreement, Australian Government Department of Foreign Affairs and Trade (Last Visited Mar. 4, 2024) Australia-Singapore Digital Economy Agreement | Australian Government Department of Foreign Affairs and Trade (dfat.gov.au).
[11] Joel Trachtman & Jeffry Frieden, U.S. Trade Policy: Going it Along vs. Abiding by the World Trade Organization (June 15, 2018) U.S. Trade Policy: Going it Alone vs. Abiding by the WTO | Econofact.
[12] See Joanne Gowa, The Oxford Handbook of The Political Economy of International Trade, 19 Oxford Handbooks (online ed. Sep. 2, 2014).
