Creating a Just and
Inclusive Global Trade Framework

(Relevant for GS Paper – 3, Economic Growth)

Introduction

In an increasingly interconnected world, trade serves as a vital engine for economic growth and development. Yet, despite globalization’s promise, the global trade system remains skewed in favor of developed nations, often sidelining the interests of developing and least developed countries (LDCs). As we move through 2025, the need for a fairer and more inclusive trade framework has gained urgency amid rising economic inequalities, climate challenges, and digital trade barriers. This blog explores the current landscape of global trade, the systemic disparities it fosters, and the pathways toward achieving a more equitable system, especially in the context of India’s evolving trade strategy and global efforts.

Global Trade: The Imbalance

According to the World Trade Organization (WTO), global merchandise trade volume is projected to grow by only 2.6% in 2025, a modest improvement after several years of disruptions due to the COVID-19 pandemic, supply chain shocks, and geopolitical tensions. However, trade benefits remain unequally distributed:

• Developed economies account for over 60% of global exports.
• African nations contribute less than 3% to world trade.
• LDCs face high tariff and non-tariff barriers, poor infrastructure, and weak integration in global value chains (GVCs).

Structural Inequities in Trade Rules

The current multilateral trading system, anchored in WTO rules, has not fully addressed the unique challenges of developing nations:

• Tariff Escalation: While raw materials from developing countries may enter developed markets with low tariffs, processed goods face higher tariffs, discouraging industrial growth.
• Subsidies: Developed countries provide heavy subsidies to their agriculture and industrial sectors, distorting competition.
• TRIPS Agreement: Intellectual property rights rules under the WTO often disadvantage developing nations by limiting access to essential technologies and medicines.
• Digital Trade: Developed nations push for liberal data flows, while developing countries seek data sovereignty to build domestic digital capabilities.

India’s Role and Response

India has emerged as a vocal proponent of reforming global trade norms to better reflect the needs of developing economies:

• India at WTO: India, along with South Africa and other developing countries, has consistently opposed blanket e-commerce moratoriums, arguing that they affect customs revenue and policy space.
• PLI Scheme & Atmanirbhar Bharat: India has implemented the Production-Linked Incentive (PLI) scheme to boost domestic manufacturing and reduce dependency on imports.
• FTAs and Regional Cooperation: India has recently signed or is negotiating Free Trade Agreements (FTAs) with the UAE, Australia, UK, and the EU, aiming to ensure balanced terms that promote exports and protect domestic sectors.
• G20 Presidency 2023 Legacy: India’s emphasis on “One Earth, One Family, One Future” promoted equitable trade practices and technology transfer, especially for the Global South.

Inclusive Trade: Key Dimensions

Creating an inclusive global trade system requires action across multiple dimensions:

1. Market Access for LDCs: Expand duty-free and quota-free access to developed markets, especially in textiles, agriculture, and services.
2. Fair Digital Trade Rules: Formulate balanced e-commerce regulations respecting data sovereignty and domestic digital development.
3. Climate and Trade Nexus: Ensure climate-related trade measures (like Carbon Border Adjustment Mechanism) do not penalize poorer countries unfairly.
4. Gender and MSMEs in Trade: Promote participation of women entrepreneurs and Micro, Small and Medium Enterprises (MSMEs) in GVCs through skill-building and access to finance.
5. Technology Transfer: Strengthen the provisions for compulsory licensing and affordable access to green and health technologies under WTO agreements.

Recent Developments (2024-2025)

• WTO MC13, Abu Dhabi (2024): Discussions on fisheries subsidies, agriculture reform, and dispute resolution showed limited consensus, highlighting the urgent need for institutional reform.
• India-EFTA Trade and Economic Partnership Agreement (2024): A landmark deal signed with Switzerland, Norway, Iceland, and Liechtenstein, aiming to boost investment and sustainable development.
• Digital Public Infrastructure (DPI): India promoted DPI models such as Aadhaar and UPI at global platforms, calling for their recognition as global public goods.
• South-South Cooperation: India’s development partnership with Africa and Latin America expanded, supporting trade capacity-building, digital connectivity, and food security.

The Way Forward

To build a fairer global trade ecosystem, the following steps are crucial:

• WTO Reform: Democratize decision-making, restore the dispute settlement mechanism, and revisit outdated rules.
• Sustainable Trade Practices: Align trade with Sustainable Development Goals (SDGs), particularly SDG 17 (Partnerships for the Goals).
• Inclusive FTAs: Prioritize labour, environment, and human rights standards in trade deals while supporting vulnerable sectors.
• Capacity Building: Provide technical assistance and Aid for Trade to LDCs for infrastructure, skills, and export competitiveness.

Conclusion

As global trade evolves amid digital transformations and climate transitions, ensuring fairness and inclusivity is not just a moral imperative but a strategic necessity. For India, balancing economic aspirations with global equity enhances its credibility as a leader of the Global South. A fairer and inclusive global trade system can unlock new opportunities, foster resilience, and pave the way for shared prosperity in a multipolar world.

 

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