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Over the last couple of years, several members of the World Trade Organisation (WTO) have been negotiating issues still not covered by the multilateral trade negotiations under the WTO framework, thereby bypassing the multilateral approach. The result of the move is a rise in talks on plurilateral deals, and at present, there are at least 16 plurilateral agreements under negotiation among various members.
In contrast to multilateralism, which involves many participants, plurilateralism involves small groups with more than two but not many participants. In other words, it is a subgroup within a larger group that has a relatively small number of members. In the WTO, when some members decide to negotiate an issue among themselves, which is not of interest to everyone, it is primarily known as plurilateral trade talks.
Under the non-discrimination principle of the WTO, any concession or commitment has to be accorded to all members. WTO members may not grant a subset of countries with which they have negotiated concessions better treatment than countries that have not been offered such concessions. The only exception is if members negotiate free trade agreements, be it bilateral or regional, with each other or negotiate a plurilateral agreement. Under such an agreement, a subset of WTO members can agree to specific disciplines that apply only to signatories and need not apply the associated benefits to non-signatories. A plurilateral agreement, however, can only be added to the WTO based on consensus. Thus, the plurilateral option offers a mechanism for groups of WTO members to agree to rules in a policy area that is not covered by the WTO or goes beyond current disciplines, as long as 'the membership as a whole perceives this not detrimental to their interests.'
To summarize, plurilateral agreements serve as a vehicle for like-minded countries to cooperate in areas not yet addressed by the WTO. They allow countries not willing to consider new disciplines in a trade policy area to opt out. (P-760, The Oxford Handbook on the World Trade Organization, 2014.) This flexibility and the opportunities for like-minded countries to work together in shaping global trade policies through plurilateral agreements can be seen as a positive development in the evolution of the WTO.
Plurilateral agreements are not a new concept in the WTO or its predecessor, the General Agreement on Tariffs and Trade (GATT). The Tokyo Round talks of GATT in 1973-1975 marked a significant milestone in the negotiation of plurilateral deals. During this period, six codes on non-tariff measures (NTMs) were negotiated, including standards code, government procurement code, subsidies code, customs valuation code, anti-dumping code, and import licensing code. These codes were actually plurilateral deals because only some GATT signatories agreed to apply the new rules. Moreover, three sectoral agreements on bovine meat, dairy products and civil aircraft were also adopted in the Tokyo Round, and these were finally converted into plurilateral deals in the WTO framework in 1994. Again, five of the six codes also become full-fledged multilateral agreements in the WTO, marking a significant shift in the global trade landscape.
Technically, various multilateral agreements on the WTO are parts of the broader agreement officially titled as the 'Marrakesh Agreement Establishing the World Trade Organisation.' All other agreements, such as the Agreement on Agriculture (AoA), are incorporated into the Marrakesh Agreement as annexes. There are four annexures in the legal text of the agreement. The first annexure is divided into three sub-annexures: the Multilateral Agreements on Trade in Goods, the General Agreement on Trade in Services, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The second annexure concerns the dispute settlement mechanism, the third annexure reviews trade policy, and the fourth one addresses plurilateral agreements. Three services protocols are attached to the GATS. Whether these 'protocol' deals in services are plurilaterals or not is debatable. The Geneva Trade Platform does not consider these as plurilateral agreements, whereas Trade Beta Blog includes these protocols in the list of plurilateral deals.
There are four types of plurilateral agreements, categorised into two groups based on their structure. One is agreements by equal treatment or discrimination, another is creating obligations or new rules. Any agreement that does not discriminate between participants and non-participants is Most Favoured Nation (MFN) in nature. This means that all participants are treated equally, without any preferential treatment. On the other hand, in any plurilateral agreement, if participants treat each other with preferences that don't apply to non-participants, it is discriminatory. The former one is also known as open plurilateral, and the latter one is closed plurilateral. This distinction is important as it determines the nature of the agreement and the extent of its impact on non-participants. Any multilateral agreement under the WTO framework, however, is always MFN in nature, with limited room for MFN exemptions.
Moreover, a plurilateral deal may involve only commitments from the participants without adding any new rules, or it may be an agreement for new rules with or without commitments. Commitments are generally listed in a schedule which includes timetables for phasing in the new commitments.
Finally, a plurilateral agreement may include negotiations with new rights and obligations, or it may only be discussions to clarify concepts and policy issues.
Now, if the parties who negotiated a plurilateral deal want to insert the agreement into the WTO rulebook, it requires full approval from all members. This process underscores the complexity and significance of consensus in the adoption of plurilateral agreements. Any new set of rules means amending the relevant WTO agreement, or incorporating any new agreement means inserting it into the relevant annexure. For instance, the Agreement on Trade Facilitation (TFA) was inserted into Annexe 1A on February 22, 2017. The insertion is also known as an amendment to the WTO agreement. Again, any amendment requires consensus among the whole WTO membership, which is not easy, highlighting the intricate nature of the WTO's decision-making process.
At present, almost all the members of the WTO are parties to at least one plurilateral agreement. Only 12 members of the WTO are not a party to any plurilateral talks. Among them, five are from South Asia, namely Bangladesh, India, Nepal, Pakistan, and Sri Lanka. India has long had a strong reservation about the plurilateral deal and continues to resist any move to incorporate it into the WTO rulebook. The latest example is its opposition to the new plurilateral agreement on Investment Facilitation for Development (IFD) in the package of WTO rules. India, along with South Africa, blocked the inclusion of the IFD agreement in Annexe 4 of the WTO Agreement, which deals with plurilateral agreements, at MC13. Although 117 developed and developing nations backed the IDF, India argued that it is 'illegal', 'non-mandated', 'non-multilateral' and a 'violation of the WTO framework'. Why Bangladesh has yet to join any plurilateral talks is a relevant question now. This column will try to find the answers next week.