Multilateral trade
Topic: International Trade: Patterns, Ports and the WTO · NCERT: Class 12, Ch 8 "International Trade"
Meaning
Multilateral trade is trade with many countries at the same time under one shared set of rules. Today the World Trade Organization (WTO) sets these rules. Its key rule is Most Favoured Nation (MFN), from GATT Article I. Under MFN, any trade benefit a WTO member gives one country must be given to all members, so no one is treated worse. Free trade areas, customs unions and special preferences for developing countries are allowed exceptions. Multilateral trade matters because common rules make trade more predictable and fairer than many separate deals.
Example
India is a founder member of the WTO. It trades with the WTO's 166 members (December 2024; verify current) under the same tariff rules. One exception: in 2019, after the Pulwama attack, India withdrew MFN from Pakistan and raised duties to 200%.
Don't confuse with
- Bilateral trade: two countries agree to trade particular goods with each other only. Multilateral trade involves many countries under common rules.