Challenges of multilateral trading system are many. Some of the important ones are given below. Challenges are related to a wide number of factors, including the agriculture sector and multilateral negotiations. All the countries the world over is engaged in some form of multilateral or bilateral trade agreements.
However, these form only a fraction of the global trade volume. It may be mentioned here that the success of the multilateral trading system is largely dependent on how efficiently the multilateral negotiations have been effected. The rules pertaining to multilateral trading system was framed in the year 1946 and as many as 23 members were on the rolls of GATT or General Agreement on Tariffs and Trade.
Usually, the members of WTO or World Trade Organization are required to follow the norms led down by WTO.
But it was observed that many countries diverted from the norms led by WTO and instead opted for RTAs or Regional Trade Agreements. This deviation itself proved to be a challenge. However, it was backed because it was felt that this may promote multilateralism.
There are few other challenges of multilateral trading system, which are as follows:
In addition to the above challenge, another challenge lay in the fact that the developing nations had to be incorporated in the multilateral trading system. This is particularly true for the developing nations as well as the LDCs or Least developed countries.
The next challenge lay with the negotiation of the agriculture sector. It was feared that bringing about radical changes would hamper the policies adopted for reforming the agriculture sector.
Another challenge was that some of the members were not willing to agree that labeling; geographical indications, environment and trade could enhance “political access of market access”.
Duration pertaining to negotiations of multilateral trading system proved to be another challenge. It was found that the duration of a multilateral negotiation prolonged for a period of 10 years or more. In such cases, risks associated with trading system get magnified.
There are other challenges of multilateral trading system as well. The important ones are scripted above.