The Underappreciated Benefits of Multilateral Rules-Based Trade

Multilateral rules-based trade, championed by the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), refers to the system where international trade is conducted according to agreed-upon transparent, non-discriminatory and impartial rules, negotiated by all its members, rather than being subject to the whims of individual governments.

While there are multiple impacts of such trade, we choose to single out five underappreciated benefits. These are not exhaustive, but they summarize important gains for all segments of society when trade is conducted by these non-discriminatory and transparent rules.

1. Open and fair multilateral trade provides a level playing field for all economies

The multilateral trade system is composed of 164 economies, with differing levels of development. They set the rules of engagement among all through negotiations and acceptance of the rules by consensus. The principles of non-discrimination, reciprocity, transparency and special and differential treatment allow a fair trade system in which developing economies have a voice. Each member can contribute to the construction of system that creates value for itself and for the world as a whole through trade. Differences with other countries are solved peacefully, using a trusted and enforceable mechanism of dispute settlements. The multilateral system shows that collaboration among nations is not only possible but the key for sustainable and inclusive development.

The WTO Needs Reform, But There’s a Context

Ultimately, there was really only one compelling idea: empower members and advocates from around the globe to interact within an informed context of trade and work with the institution as it actually existed. It was—and remains—a fundamental point. The WTO is currently winnowing down candidates to fill the vacant Director General post and considering a wide range of reform proposals and suggestions. The institution’s faltering legal system just ruled in a dispute between two of the largest members in the system, setting up another round of inquiries into the health and functioning of what has always been called the “crown jewel” of the organization. As WTO members grapple with the biggest sets of challenges faced over its 25-year history, maintaining a clear-eyed view of possibilities is important. The WTO may become anything the members want it to become, but for the moment, it does not operate with the same logic or functions like the UN, the IMF, the World Bank, the OECD, a national government, a corporation, or an NGO. Transposing the “wishful thinking” that WTO reform will take place based on experiences with these other institutions and organizational forms, no matter how good, will fail.