So what if the WTO is wobbly? Don’t dismiss the potential of plurilateral pacts among willing nations

This trade body operates by consensus and India has had its fair share of blame for such huddles yielding little, having held firm on its right to subsidize agriculture, a point that rich countries found hard to stomach.

This time, the big tussle was over the extension of a moratorium on digital commerce tariffs, with the US and Brazil as the principal adversaries. A plurilateral pact is in the works to keep digitally transmitted stuff duty-free—led by the EU, which has invited other members to sign up for it.

Such plurilateral deals have the advantage of bypassing the WTO’s system of consensual decision-making. There is no bar, though, on its members forging pacts among themselves in breakaway groups. Another agreement of this kind being thrashed out is aimed at investment facilitation.

Like Brazil, India was glad to see the WTO’s no-tariff rule on digital trade lapse; New Delhi views such duties as a sovereign right. But it has also taken a broad stance against plurilateral deals, arguing that these exceed the scope of the WTO framework. Principled as this sounds, it amounts to making the best the enemy of the good.

The WTO has been crippled ever since US President Donald Trump refused, in his first term, to fill vacancies in the appellate authority over its dispute settlement mechanism. Those posts remain vacant, leaving the body’s adjudicatory role in suspended animation.

One way out is for a willing coalition to reach a sub-deal without the US aimed at reviving this key function for disputes that do not involve America. A new appellate body could be set up for this. It would be better than pushing for another multilateral rule-maker for trade that excludes the US altogether.

America has shown scant respect for the basic tenets of a liberal trade order. It has scoffed at the most-favoured-nation principle, by which every WTO member must treat everyone else equally. If the US wants to flout WTO rules in its myopic self-interest, there is no reason for the rest to suffer a world without trade rules.

For India to reject plurilateral pacts as a matter of principle is to deprive itself of desirable options in the face of evidence that the world’s largest economy has more or less gone rogue.

India and the bulk of developing countries are justified in rejecting the proposition that digital goods should forever stay duty-free. Movies, video games, software packages and the like were only a minor part of world trade back in the 1990s, when that moratorium found WTO favour. Now, they are not just part of the standard fare of exports and imports, their value has grown enormously.

Since taxing an imported shirt, say, is a sovereign decision, so should levying a tariff on digital products be. However, staying aloof from the investment pact strikes a discordant note.

As India joins global supply chains, it would need not just inflows, but also easier pathways to invest abroad. We could gain from a transparent, non-arbitrary framework for such investments and their taxation, so long as a sub-deal offers us sufficient latitude to serve our own interests.

India was enthusiastic about development being placed on the WTO agenda at its Doha Round of talks in 1999. Can there be development without investment?