The global trade regime as embodied in GATT had faced a serious existential threat in 1980s. Lester Thurow had announced: "GATT is dead in the water".

The threat was averted by the trade-majors simply by incorporating the modest framework of GATT into an ambitious, almost open-ended global regime which extended its jurisdiction far beyond cross-border trade in goods and also loosened some restrictive features of trade in agriculture.

In the name of trade in services, it opened up the important area of financial and other professional services. It brought in several issues relating to investment abroad in the name of a discipline governing trade-related investment issues. Most important, it laid down a demanding regime on protection of intellectual property rights, a matter essentially belonging to a genre little related to trade.

And the event of this resurrection of a dying GATT into a monster of WTO was celebrated as 'a defining moment' in history.

All this was possible because the gains from the proposed arrangement were expected to accrue mainly to MNCs operating from the OECD countries, be they global oligopolies in foodgrain, fertilisers and genetically modified seeds, big pharma companies or financial behemoths. The costs were largely borne by the developing countries who had to surrender a considerable space of policy autonomy in crucial areas of economic management and development strategy.

That ambitious system was straining under the burdensome weight of its gigantic mandate, but it was jogging along with its succession of ministerial meetings, some ending in fiasco, some remitting the problems back to its own officialdom, and some pushing down new disciplines on reluctant developing countries.

All this continued merrily until the 'three body blows' the system suffered. The global financial crisis of 2008; rapidly escalating US–China trade friction; and Covid 19.

Institutionally, the crisis faced by the system is reflected in the paralysis of its Dispute Settlement System, its crown jewel, so to say, intended to bring coherence, transparency and stability to its operating mechanism. And now the impending premature exit of its chief executive underlines the severity of the crisis.

WTO now appears to be moving towards the fate that Lester Thurow had somewhat hastily predicted for GATT in the mid-eighties.

There is no easy and self-serving solution available to the trade majors now to get out of the crisis. The crisis then was caused partly by internecine tensions among the trade majors, and partly by the felt limitations of the system to incorporate new areas promising huge economic gains for the operators and agents from OECD countries. It could be resolved simply by extending jurisdiction over the new areas and by tweaking old disciplines.

The current challenge is of a different genre altogether.

The financial crisis of 2008 brought to surface the inherent uncertainty in the apparently sophisticated, non-transparent and non-accountable functioning of global financial markets. It slowed down the global economy and the after-effects are still visible.

The emergence of China working within the four corners of the global system of trade and finance and technolgy has altered the global scenario altogether. The supremacy of Western powers originating in colonialism and embodied contemporarily in the WTO, stands challenged. The USA's frenzied reaction only compounds the threat to the present "order", such as it is. The Chinese posture to "save" the multilateral system has not yet convinced the global community. A parallel, ingenious move by China, of a totally different kind, the "Road and Belt Initiative" has met with a much better response, but its long term implications are yet to be discovered, much less mulled over and absorbed by the nation-states, the existing multilateral institutions and economic agents and operators. But of that, a little later.

Enter Covid 19 and the scene is altered fundamentally. Covid has shaken the foundation of international interaction, be it trade, travel or investment.

Seamless and smooth supply chains in manufacture and trade have been disrupted. A perceptible shift away from acceptance of the market-supremacy paradigm as an article of faith, towards recognising or contemplating need for "industrial policy", "strategic autonomy", "self-reliance" and even "economic and strategic independence" has occured in the thinking of political establishments all over the world, particularly in the larger or more developed economies.

International travel has taken a dive leading to huge losses in tourism and trade and possibly prospects of investment abroad.

While the global financial markets reflect the severity of the crisis to some extent, the medium term effects on overseas investments have yet to unfold fully, although it is evident that they will be likely moving in the negative direction.

While one would expect that the global public health crisis unleashed by Covid 19 should enhance international cooperation in R&D in research laboratories, pharmaceutical industry and public health experts and practitioners, we have witnessed a contrarian trend in the response of USA insisting upon exclusive rights to vaccines being developed and, even worse, pirating the shipments of PPE intended for other nations.

Covid 19 has also indirectly signalled the immediacy of the environmental crisis. Narrow political considerations at present are leading to scapegoating China for its failure in enforcing required measures to discourage and stop anti-environment practices prevalent in "wet markets" of animal products. The real and more generalised issue brought to the surface by Covid 19, and indeed by its predecessors like SARS, Ebola etc is that the planet is fast reaching the endpoint in its pursuit of extractive growth.

The international deliberations on climate warming crises have not led to perceptible results. Mainly because the solutions are sought within the limitations and biases of the present economic and political order. The longer this dilly-dallying persists, the greater will be the danger of unanticipated outcomes like pandemics, severe droughts and famines, water based conflicts. Covid 19 is a warning signal of the impending disaster on the environmental front.

The drastic and by all accounts long lasting nature of the current challenge to the existing multilateral regimes pertaining to trade, investment and technolgy calls for fresh thinking and new approaches.

What follows contains some musings in that direction.

To start with, it is evident that no tweaking or simple aggrandising mutation of the existing system would do. We are facing an unprecedented challenge and we need a novel approach.

The current institutional model of international economic interaction is based on market supremacy, competition amongst economic agents, economies of scale, free flows of goods, services, capital and progressive integration of economic activities across the globe, the MNCs being the agents bringing this about.

Recent history has exposed its inadequacy as well as its ineffectuality. Considering the enormity of the problem and its planetary character (as distinct from "global" which is used mainly to signify seamless spread of market across different geo-political entities), we need to anchor our approach in a non-market paradigm. What would be the elements of such an approach?

The essential elements would be recognition of

a. Humanity taking precedence over Nationality;

b. Planet (geological–ecological entity) taking precedence over Globe (aggregation of markets across political boundaries); and

c. Cooperation and Co-sharing taking precedence over Market and Competition among agents.

The history of colonisation shaped the model of international trade and investment based on "free access," to "markets" through sea-lanes open to all, i.e. to all colonisers, and, of course, "freedom" in effect, being defined by respective military power. Decolonisation did not alter the picture basically. Nor did revolution in the means of transport. Domination by ex-colonisers continued, give and take some changes in political connotations and some co-option of the emerging economic agents in the erstwhile colonies, provided they did not question the basics of the prevalent market system and its operation.

That model needs to be junked, once for all..

A. Survival of the planet and regeneration of its ecology;

B. Fulfilment of the basic needs of humanity and its progressive enrichment, materially as well as culturally; and

C. Utilisation of science and technology to further these two goals.

These should constitute the founding cornerstones of any future model for international interaction, particularly in regard to economic activities coming under the rubric of trade, investment and technology.

Such an approach will cut across the existing taxonomy in terms of developed and developing countries; North and South; Free market economies and Planned economies.

It will also substitute the free-for-all competitive access to all markets for trade and investment by a co-operative and mutually acceptable template which could be negotiated bilaterally between two countries or plurilaterally or multilaterally amongst all the countries.

As regards science and technology, the exchanges would be governed by a template designed mainly on considerations of promoting pursuit of knowledge, and harnessing it to fundamental objectives of the new paradigm. It follows that recognition of and reward to individual / corporate contributions in this regard will be totally functional, that is to say, they will be limited to the extent they subserve the basic objective of the template.

In such a paradigm, trade exchanges will originate in surpluses and diversity, as was largely the case in the era prior to commercial and industrial capitalism. The complementarity rather than calculus of comparative advantage will determine trade exchanges. Moreover, real social costs, including the costs of long haul transport and its polluting side effects, will get reflected in the determination of trade exchanges.

It follows that there will be no room for the artificial imposition of a trade paradigm on exchange of services and flow of investments, as is sought to be done under the WTO disciplines.

With the junking of the colonial model of "free and equal" access on competitive basis to "markets" (divested conceptually of people and their lives and livelihods and consisting only of consumers), and its replacement by a model based on complemetarity and co-operation, the relevance of the Road and Belt Initiative becomes apparent.

Such an initiative where geographical linkages are promoted on the basis of mutually beneficial cooperation, trade and other exchanges will take place on the basis of mutual needs and capabilities, many times between pairs of countries involved, sometimes on a regional basis involving a number of countries in the region. It needs hardly a mention that such exchanges will minimise transportation costs, financial and social.

Since such exchanges are rooted in real interdependence and/or mutual cooperation, the risk of disruption of supply chains brought into being artificially by the "global" market will be non-existent. Similarly, there will be no scope for predatory pricing in such exchanges.

Nor will there be any fear of de-industrialisation through the so-called comparative trade advantage or re-introduction of colonial patterns of power relations through the overbearing presence of foreign investment.

The new paradigm for exchanges in Science and Technology dispensing with the preposterous idea of private property in knowledge, will facilitate quick access to new inventions, remedies and vaccines for affected populations all over the planet, thus rendering future pandemics much less catastrophic. Indeed, abandoning the model of extractive growth along with its promethean arrogannce to try ceaselessly to bend nature to human greed, will itself reduce substantially, if not eliminate altogether, in due course, the spectre of future pandemics.

In short, the human race has received a ringing warning signal in the onset of Corona virus. It has exposed, as never before, the obsolescence of the existing global paradigm on trade, investment and technology. The tragedies of two World Wars and Great Depression had failed to expose the fatal potentialities of the paradigm that has evolved over centuries. The task is being accomplished dramatically by a pandemic caused by an invisible but ever present, unbeatable enemy of the human race.

We will be answerable to history whether we heeded the signal and adapted our institutions to our common survival and welfare, or chose to quibble and tweak and malinger and let the woods burn while unsuccessfully seeking to hold on to our little bushes.

Cover Photograph Getty Images

S.P.Shukla is retired from the IAS. He is a former Finance Secretary.