WTO still vital despite fractures in global trade, says Indonesia’s Pangestu
As the WTO comes under strain, the way forward lies in balancing global engagement with domestic strength, sustaining faith in the multilateral trading system while building open, regionally-integrated economies capable of withstanding external shocks, Mari Elka Pangestu says.
New Delhi: Despite fractures in the global trading order, multilateral institutions like the World Trade Organization (WTO) remain indispensable, as they provide rules and confidence that keep international trade flowing, Mari Elka Pangestu, special adviser for international trade and multilateral cooperation to the President of Indonesia, said.
The WTO continues to provide the rules that underpin international commerce, even if its enforcement mechanisms have weakened, Pangestu told Mint on the sidelines of the Kautilya Economic Conclave in the national capital.
“The multilateral trading system has been evolving over the past 10 to 15 years, particularly since the collapse of the Doha Round in 2008. But that doesn’t mean the WTO has lost its relevance," said the former Indonesian trade minister and professor of International Economics at the University of Indonesia.
“It remains vital, (as) a rules-based framework that allows countries to trade with confidence, knowing there are clear principles and accountability when those rules are broken," she added.
Tariff pressures
Pangestu argued that while the rules-based multilateral system has come under strain, particularly as the US resorts to unilateral tariffs and the WTO’s dispute system remains paralyzed, the institution’s role is still vital for developing economies.
However, for the Global South, including countries like India and Indonesia, the challenge now is to build domestic resilience, Pangestu said.
“That means undertaking reforms at home, addressing social issues, and deepening regional economic cooperation," she added.
To be sure, the resurgence of US trade tariffs has cast a long shadow over emerging economies, like India and Indonesia, threatening to disrupt supply chains and erode export competitiveness.
For both countries, which have benefited from integrated global markets and diversified trade links, Washington’s protectionist turn signals a return to uncertainty.
Higher duties on key exports, from steel and textiles to electronics, risk dampening manufacturing momentum and complicating investment flows.
India has been hit particularly hard, with Washington doubling import duties to as high as 50% on a wide range of goods, including textiles, gems and jewellery, footwear, furniture, and chemicals. These duties include an additional 25% tariff to punish New Delhi for its continued purchases of discounted Russian oil.
In Indonesia’s case, the US has imposed a 19% tariff on Indonesian goods under a reciprocal trade agreement, while simultaneously gaining extensive duty-free access for its own exports to Indonesia.
Pangestu emphasized plurilateral initiatives such as the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which mirrors the WTO’s dispute process and includes members like the European Union, Japan, China, and several Asian countries, as examples of how nations can sustain the rules-based order even amid gridlock.
The way forward lies in balancing global engagement with domestic strength, sustaining faith in the multilateral trading system while building open, regionally-integrated economies capable of withstanding external shocks, she said.
“At the same time, we need to strengthen regional economic integration, not closed blocs, but open, outward-looking groupings that complement global trade," she added.
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