Decline of WTO Multilateralism and Rise of Geoeconomic Protectionism: Implications for Global Trade

Indian Express - Opinion · 17 Mar 2026 · 2 min read
Prelims · International relations Mains · GS2 International relations High relevance

The article critiques the collapse of the 'doux commerce' theory underpinning WTO-led globalization, highlighting how trade has shifted from mutual benefit to strategic weaponization, with significant implications for India's trade policy and economic security.

Key points

Doux commerce: The Enlightenment-era theory that trade softens geopolitical tensions is collapsing, as seen in recent tariff wars and export controls, challenging foundational assumptions of WTO multilateralism.

Geoeconomic vulnerability: Interdependence is now viewed as strategic liability, with countries like India facing supply chain risks in semiconductors and critical minerals due to geopolitical tensions.

WTO multilateralism is being replaced by bilateral agreements and 'friend-shoring', fragmenting the global trading system India helped build through GATT and WTO participation.

[GS3-Economy] The shift from efficiency-driven 'offshoring' to security-focused 'near-shoring' increases production costs, directly impacting India's export competitiveness and manufacturing ambitions.

Weaponization of trade: The US-China tech war and Russia's energy geopolitics demonstrate how critical exports are now used as diplomatic leverage, affecting India's strategic autonomy.

This connects to GS2-International Relations as India must navigate competing blocs (IPEF, BRICS) while protecting economic interests amid declining trust in global institutions.

Historical context: The 1990s WTO-led globalization that benefited India's services sector is giving way to 18th-century-style mercantilism, requiring policy recalibration.

[GS4-Ethics] The erosion of trade-as-peace narrative undermines cross-cultural understanding, a concern for India's diaspora-driven soft power and multicultural identity.

Way Forward: India should diversify critical supply chains through PLI schemes, strengthen rupee trade mechanisms with strategic partners, and lead Global South demands for WTO reform to prevent trade fragmentation.

Key terms

WTO multilateralism

The rules-based trading system established in 1995, which India used to grow exports from $37 billion (1995) to $770 billion (2023). Its decline challenges India's developing country status and dispute resolution mechanisms.

Doux commerce

An Enlightenment theory by Montesquieu asserting that commerce civilizes nations by creating mutual interests that deter conflict. For UPSC, this underpins India's post-1991 economic diplomacy and the philosophical basis of WTO multilateralism now under strain.

Geoeconomic vulnerability

The strategic risk arising from economic interdependence, where trade dependencies can be weaponized (e.g., semiconductor exports). Relevant to GS3's 'economic security' and India's Atmanirbhar Bharat policy responses.

Friend-shoring

A post-globalization trade strategy where supply chains are relocated to politically aligned nations. Impacts India's manufacturing ambitions under Make in India and requires new bilateral partnerships beyond traditional cost considerations.