The evolving nature of trade agreements

  • February 25, 2026
  • IR

The Hindu

The evolving nature of trade agreements

I. Core Context

The article analyses a shift in the architecture of global trade agreements, focusing on the emergence of Reciprocal Trade Agreements (RTAs/ARTs) under the U.S. administration that appear to diverge from established multilateral norms under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).

It frames the issue as:

  1. A challenge to multilateral trade governance
  2. A shift toward transactional and bilateral trade deals
  3. A weakening of rule-based global trade order

II. Key Arguments Presented

1. Departure from Multilateral Norms

The article argues that recent U.S. trade agreements:

  1. Do not conform to WTO requirements
  2. Depart from the Most-Favoured-Nation (MFN) principle
  3. Emphasise reciprocity over universality

This signals erosion of the rule-based multilateral system.

2. Emergence of Reciprocal Trade Agreements

These agreements are portrayed as:

  1. Politically negotiated
  2. Sector-specific
  3. Transactional
  4. Often outside formal WTO notification frameworks

They differ from comprehensive FTAs that align with GATT Article XXIV provisions.

3. Undermining WTO Oversight

The author highlights that:

  1. Failure to notify such agreements to the WTO limits scrutiny
  2. Dispute settlement mechanisms weaken
  3. Transparency reduces

This may accelerate fragmentation of global trade governance.

4. Shift from Globalisation to Geoeconomics

Trade agreements are increasingly instruments of:

  1. Strategic leverage
  2. Domestic industrial policy
  3. Protectionist recalibration

Economic nationalism replaces cooperative multilateralism.

III. Author’s Stance

The tone is critical of the evolving U.S.-led model.

The article clearly supports:

  • Multilateral trade governance
  • WTO-centred rule enforcement
  • Institutional oversight

It views unilateral reciprocal deals as destabilising.

IV. Possible Biases and Limitations

1. Normative Bias Toward Multilateralism

While defending WTO norms, the article may underplay:

  1. WTO dispute settlement paralysis
  2. Ineffectiveness in addressing digital trade and subsidies
  3. Slow reform processes

Multilateralism itself faces structural stagnation.

2. Limited Acknowledgment of Domestic Political Pressures

Trade policy often reflects:

  • Domestic employment concerns
  • Strategic competition
  • Security considerations

The article focuses more on legal legitimacy than political economy drivers.

3. Overgeneralisation of U.S. Approach

Not all bilateral agreements inherently undermine multilateral trade. Some can complement global rules.

V. Pros and Cons of the Evolving Model

Pros

• Greater flexibility for countries
• Faster negotiation timelines
• Strategic alignment in sensitive sectors
• Tailored reciprocity

Cons

• Erosion of WTO authority
• Fragmented global trade architecture
• Reduced predictability
• Weakened dispute resolution

VI. Policy Implications

1. For Global Trade Governance

There is an urgent need for:

  1. WTO reform
  2. Restoration of Appellate Body functionality
  3. Updating rules for digital trade and subsidies

2. For Developing Countries

Developing economies must:

  1. Safeguard multilateralism
  2. Avoid asymmetric reciprocal deals
  3. Strengthen collective bargaining platforms

3. For India

India should:

  1. Engage strategically in bilateral deals
  2. Ensure WTO compatibility
  3. Protect domestic policy space
  4. Diversify trade partners

4. Trade Diplomacy Recalibration

India must balance:

  1. Strategic autonomy
  2. Market access
  3. Compliance with global norms

VII. Real-World Impact

Short-term:

  • Increased bilateral deal-making
  • Trade fragmentation

Medium-term:

  1. Emergence of trade blocs
  2. Reduced predictability in global supply chains

Long-term:

  1. Possible decline in WTO centrality
  2. Institutional realignment of global trade

VIII. UPSC Relevance

GS Paper II

• WTO and global governance
• India–US trade relations
• Multilateral vs bilateral diplomacy

GS Paper III

• Trade policy
• Globalisation vs protectionism
• Impact of tariff measures

Essay Themes

• Crisis of multilateralism
• Economic nationalism
• Rules vs power in global governance

IX. Balanced Conclusion and Future Perspective

The evolving trade architecture reflects deeper geopolitical tensions and dissatisfaction with existing multilateral frameworks. Reciprocal trade agreements offer flexibility but risk weakening institutional stability.

The WTO-led order, though imperfect, provided:

  1. Predictability
  2. Transparency
  3. Universal standards

Reform, not abandonment, is essential.

For India, the path forward lies in strategic engagement—leveraging bilateral opportunities while defending a rules-based multilateral system that protects developing country interests.

The future of trade will likely be hybrid: layered networks of bilateral, regional, and multilateral frameworks. The challenge will be to ensure that flexibility does not descend into fragmentation.