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Multilateralism is dead or in moribund state, but long live multilateralism is the new name of the game in geopolitical theatre nations are playing in full throttle, particularly the trade majors of the rich world and to a certain extent emerging economies including India.
As of today, the world is riven and driven by the proliferation of the so-called Free Trade Agreements (FTAs) between and among trading nations that they no longer come to believe in the rules- based world trading system so painstakingly built and bolstered in the post-war through the General Agreement on Tariffs and Trade (GATT) and later in its second avatar the World Trade Organization (WTO) in the mid-1990s.
Sadly, trade fragmentation narrows opportunities for up-and-coming economies to find their feet in capturing markets for products in which they traditionally enjoyed competitive advantage. Way back in 1995 the celebrated economist Jagdish Bhagwati in a parody candidly criticized the “infatuation with FTAs by the U.S” as being paradoxically a futile and fruitless bid in promoting freer and more open global trade. He rightly excoriated that too many crisscrossing FTAs would permit nations to adopt discriminatory trade policies and prune the economic gains of trade. He pertinently saw the entanglements of scores of FTAs with assorted rules, tariffs, and institutional arrangements as a “spaghetti bowl.”
Countless empirical studies confirmed the Spaghetti Bowl effect’s veritable cost on countries’ trade volumes and competitiveness. It is revealing to note that since the start of the 11 nations Association of South East Asian Nations (ASEAN)-India Trade in Goods Agreement (AITIGAT), India’s exports to ASEAN have gone from 18.11 billion dollars in 2009-2010 to 38.96 billion dollars in 2024-25, while in stark and substantive contrast, India’s imports from ASEAN have zoomed from 25.8 billion dollars in 2009-10 to a whopping 84.16 billion dollars in 2024-25.
Similar is the case with Japan and South Korea, where in the latter case India’s exports to Korea have risen from 3.73 billion dollars in 2010-2011 to 5.92 billion dollars in 2024-25, whereas India’s imports from Korea have rocketed from 10.46 billion dollars to 21.06 billion dollars in the comparable periods.
Keio University researchers in Japan studied as many as 132 countries and found that, although trade volumes were positively correlated with FTAs, the upshot was a heavy and costly administrative burden flowing from the multiplicity of FTAs putting paid to the use of FTAs ’ preferential tariffs!
That India has of late been stitching several FTAs is widely known, particularly in the second coming of Donald Trump as the President of the United States when he unleashed a virtual war to make tariffs a weapon to penalize nations that run an adverse trade balance with the world’s trade major, which includes India too. India had concluded as many as 16 FTAs from as far back as 2000 with Sri Lanka to the one concluded with New Zealand on December 22, 2025, and the European Union on January 27, 2026. To top it all is the declaration on February 7, 2026, that the U.S and India have zeroed in on a Framework for an Interim Agreement for reciprocal and mutually beneficial Trade Agreement, full details of which are yet to be out, although India faced the tariff tantrums of Trump from February last year as he turned truculent in his bid to Make America Great Again (MAGA). That the United States remained great as a unipolar power and earlier too when the world had a bipolar bloc with the erstwhile Soviet Union and its satellite nations ruling the roost became history after 2008. This is when the global financial meltdown struck the global economy with the world’s power structure splintering as China too began muscling in the meantime!
In fine, FTAs are an expedient measure and no answer to India’s failure to market and promote products by innovative approaches. FTAs only complicate matters by rules of origin (ROO) technicalities, heavy compliance cost, open trade distortion slant, and exclusion of small and medium enterprises that could otherwise take part in the export gambit with gusto when rules remain simple and practical. It is also impractical to expect trading partners of FTAs to invest in India or vice versa, as in the case of the United States seeking humongous sums.
Disclaimer: The opinions and views expressed in this article/column are those of the author(s) and do not necessarily reflect the views or positions of South Asian Herald.
