Trade deals have played a significant role in shaping the global economy, with the General Agreement on Tariffs and Trade (GATT) signed in 1948 being one of the early milestones in this regard. The formation of the World Trade Organisation (WTO) in 1995 further formalised the process of continuous negotiations aimed at reducing trade barriers and promoting international cooperation. One of the fundamental principles of the WTO is the “most-favoured nation” clause, which requires countries to extend any favourable trade terms granted to one nation to all other member nations.
However, in recent years, the global trade landscape has undergone significant changes. The rise of protectionist rhetoric in countries like the United States has led to a decline in the number of new trade deals being signed. Both former President Donald Trump and current President Joe Biden have embraced protectionism, contributing to a sense that trade deals are becoming a thing of the past. The World Trade Organisation (WTO) itself has also faced challenges, with its effectiveness being called into question.
Despite these challenges, trade deals continue to be negotiated and signed around the world. Regions like South Asia and Latin America are actively engaged in dealmaking, demonstrating that the importance of international trade agreements persists. These agreements play a crucial role in promoting economic growth, creating jobs, and fostering cooperation among nations.
The evolution of trade deals reflects a changing global economy where countries are increasingly interconnected and interdependent. The benefits of trade agreements extend beyond just economic considerations, with agreements often including provisions related to labour rights, environmental protection, and intellectual property rights. By establishing common rules and standards, trade deals help to create a more predictable and stable trading environment.
In the current context, the future of trade deals remains uncertain. While some countries are moving towards bilateral agreements rather than multilateral deals, the need for international cooperation on trade issues is as important as ever. The challenges posed by issues like climate change, digital trade, and global health crises require coordinated action among nations.
As the global economy continues to evolve, the role of trade deals in shaping international trade will remain crucial. While the landscape may be shifting, the underlying principles of openness, cooperation, and mutual benefit that underpin trade agreements are likely to endure. By adapting to new challenges and opportunities, trade deals can continue to play a vital role in driving economic growth and prosperity around the world.
