What next for plurilateral trade agreements?

The International Chamber of Commerce (ICC), representing over 45 million companies in more than 170 countries, has issued a stark warning in its latest policy paper, "What next for plurilateral trade agreements?" The report highlights a growing disconnect between the sluggish pace of multilateral rulemaking and the rapid evolution of the private sector. This gap has forced businesses to navigate a fragmented landscape of unilateral measures, divergent national regulations, and temporary workarounds that increase operational costs and stifle innovation. To rectify this, the ICC advocates for a strategic shift toward plurilateral agreements—negotiations among a subset of WTO members—as the most practical pathway to modernizing the global trade system.

The Evolution of the Multilateral Trading System: A Brief Chronology

To understand the current impasse, it is necessary to examine the historical trajectory of trade governance. The multilateral system has long oscillated between broad, consensus-based agreements and more targeted, smaller-group arrangements.

1947: The General Agreement on Tariffs and Trade (GATT). Following World War II, 23 countries established the GATT to reduce trade barriers. For decades, it functioned through successive "rounds" of negotiations.
1994: The Marrakesh Agreement. The conclusion of the Uruguay Round led to the creation of the WTO. This established a "single undertaking" principle, meaning that any new rule required the consensus of every member state.
1996: The Information Technology Agreement (ITA). Recognizing the need for specialized rules, a subset of members signed the ITA, eliminating duties on IT products. This served as a successful early model for plurilateral cooperation.
2001: The Doha Development Agenda. Launched with the goal of significant global trade reform, the Doha Round eventually stalled due to irreconcilable differences between developed and developing nations regarding agriculture and industrial tariffs.
2013: The Trade Facilitation Agreement (TFA). A rare multilateral success, the TFA focused on streamlining customs procedures. According to WTO estimates, full implementation of the TFA could reduce trade costs by an average of 14.3%.
2015: ITA Expansion (ITA II). Building on the 1996 success, over 50 members agreed to eliminate tariffs on an additional 201 high-tech products, covering an annual trade value of over $1.3 trillion.
2017–Present: The Rise of Joint Statement Initiatives (JSIs). Facing a deadlock in broad multilateral talks, groups of WTO members began "Joint Statement Initiatives" on topics like e-commerce, investment facilitation, and domestic services regulation.

The Economic Necessity for Rulemaking Reform

The urgency for new trade rules is underscored by the explosive growth of the digital economy. According to data from the United Nations Conference on Trade and Development (UNCTAD), the value of global e-commerce reached nearly $27 trillion in recent years, yet many of the rules governing these transactions are non-existent or conflicting.

In the absence of updated WTO rules, countries have turned to unilateral digital services taxes, localized data storage requirements, and varying standards for artificial intelligence. These "divergent regulatory requirements" mentioned by the ICC create a "patchwork" effect. For a small or medium-sized enterprise (SME) looking to export, navigating 50 different sets of digital privacy laws is often a prohibitive cost, effectively barring them from the global marketplace.

Furthermore, the ICC points out that "ad hoc workarounds" are becoming the norm. While these allow trade to continue in the short term, they lack the legal certainty and enforcement mechanisms provided by a formal WTO framework. Without predictable rules, long-term capital investment is discouraged, particularly in emerging sectors like green technology and digital infrastructure.

Deepening Existing Agreements: The ICC’s Forward-Looking Agenda

The ICC’s policy paper identifies three specific areas where plurilateral initiatives should focus to deliver immediate commercial value.

1. E-commerce and Artificial Intelligence

While a Joint Statement Initiative on E-commerce is already underway, the ICC calls for a "second-phase" agreement. This phase would explicitly address the integration of AI in commerce. As AI becomes a tool for everything from supply chain optimization to customer service, trade rules must ensure that algorithms do not become hidden barriers to trade. Additionally, the ICC emphasizes the need for binding commitments on cross-border data flows and the prohibition of data localization requirements, which are currently one of the fastest-growing impediments to global services trade.

2. Expanding the Information Technology Agreement (ITA 3.0)

The tech landscape has shifted significantly since the last ITA expansion in 2015. The ICC proposes a "post-2015" expansion to cover modern technology products that are essential for the current economy. This includes components for 5G infrastructure, advanced semiconductors, drones, and "green tech" hardware required for the energy transition. By removing tariffs on these goods, the WTO can directly support global climate goals and digital connectivity.

3. Trade Facilitation 2.0 (Digital Trade Documents)

Building on the success of the 2013 TFA, the ICC advocates for "TFA 2.0," which would focus on the complete digitalization of trade documents. Currently, the transition from paper-based bills of lading to electronic records is uneven. The ICC suggests that WTO members align their national laws with the UNCITRAL Model Law on Electronic Transferable Records (MLETR). Implementing digital trade documents could reduce the time required to process goods at borders by up to 80%, providing a massive boost to global trade efficiency.

Overcoming Barriers: Implementation and Inclusivity

For plurilateral agreements to succeed, they must overcome both legal and political hurdles. Historically, some developing nations, led by India and South Africa, have expressed concern that plurilateral agreements undermine the multilateral nature of the WTO. They argue that "coalitions of the willing" allow wealthy nations to set agendas that ignore the needs of the Global South.

The ICC addresses these concerns by recommending "open accession" and "meaningful technical assistance." Under an open accession model, any plurilateral agreement would be designed so that any WTO member can join at a later date once they have the capacity to do so. Furthermore, the ICC suggests that successful agreements must include clear implementation pathways and "credible enforcement" mechanisms. Without a way to resolve disputes, an agreement is merely a statement of intent rather than a functioning trade rule.

To ensure transparency, the ICC calls for "meaningful private-sector engagement." Since businesses are the primary users of these rules, their technical expertise is essential in drafting language that reflects operational realities.

Official Responses and Inferred Reactions

The shift toward plurilateralism has met with mixed reactions from the international community.

Proponents: Many developed economies, including the European Union, Japan, and the United States, have increasingly supported JSIs as the only way to keep the WTO functional. EU trade officials have frequently stated that the WTO must prove it can still produce results, and plurilateral tracks offer the most viable evidence of success.

The WTO Secretariat: Director-General Ngozi Okonjo-Iweala has acknowledged the importance of JSIs, noting that they can act as a bridge to future multilateral agreements. The Secretariat has been working to find legal "homes" for these agreements within the WTO structure, such as through Annex 4 of the Marrakesh Agreement.

The Skeptics: Critics argue that plurilateralism creates a "two-tier" WTO. However, the ICC paper counters this by emphasizing that the fragmentation caused by no rules is far more damaging to developing nations than the existence of plurilateral rules. Without a global framework, smaller nations are left to negotiate one-on-one with economic superpowers, where they have significantly less leverage.

Implications for the Global Economy

The stakes for the "What next for plurilateral trade agreements?" agenda are high. If the WTO fails to adopt these practical pathways, the world faces a future of "de-globalization" or "slow-balization."

The broader impact of adopting the ICC’s recommendations would likely include:

Reduced Costs for SMEs: Streamlined digital rules and paperless trade disproportionately benefit smaller companies that lack the legal departments to handle complex trade barriers.
Accelerated Innovation: By providing a stable legal environment for AI and data, trade rules can encourage investment in next-generation technologies.
Resilient Supply Chains: Clearer rules on trade facilitation can help mitigate the disruptions seen during the COVID-19 pandemic by ensuring that goods move across borders with minimal friction.

In conclusion, the ICC’s policy paper serves as both a critique of the current state of trade governance and a blueprint for its survival. As the ICC notes, the goal is not to replace the multilateral system but to strengthen it through pragmatism. By focusing on predictability, enforceability, and relevance to modern technology, plurilateral agreements offer a way to ensure that the global trade rulebook finally catches up with the commercial reality of the 21st century.