EU is planning a revolutionary replacement for the incapacitated WTO!

EU is planning a revolutionary replacement for the incapacitated WTO!

There is intensive discussion in the European Union about the future of the World Trade Organization (WTO), which is currently in a position where it is unable to act. At an EU summit in Brussels, Ursula von der Leyen, President of the European Commission, spoke of the need to “redesign” the WTO. This push aims to fundamentally reform the organization, which was founded in 1995 to address global trade barriers. Chancellor Friedrich Merz (CDU) introduced the idea of ​​a “new type of trade organization” into the debate that could gradually replace the WTO.

Merz emphasized that the current state of the WTO is unsustainable and that mechanisms to resolve trade disputes are urgently needed. The Chancellor has already held talks with other leaders, including Emmanuel Macron and Keir Starmer, to develop the idea further. He sees these considerations as “at the very beginning” and emphasizes that the dysfunction of the WTO requires clear reforms.

The challenges of the WTO

The WTO suffers from increasing protectionism, outdated rules and the deadlock of its Appellate Body. This problem is being taken up by various sides in order to promote reforms. Von der Leyen sees cooperation with the Trans-Pacific Partnership (CPTPP) as a first step towards a more effective WTO. It emphasizes the need to ensure free trade on a stable, rules-based basis.

A detailed analysis of the WTO crisis shows that the organization, which was founded with the aim of promoting international trade and increasing living standards worldwide, is no longer able to cope with the current challenges. The WTO consists of 164 member states, which together handle around 98% of global trade in goods. Its core principles include MFN treatment, national treatment and transparency, but these are increasingly being undermined by geopolitical rivalries.

The Doha Development Round, which has been progressively stagnating since 2001, highlights the WTO's difficulties. Although significant progress has been observed in the creation of free trade agreements, fragmented trade relations and political gridlock within the organization prevent significant reforms. The US is currently blocking the appointment of new members to the Dispute Settlement Body (DSB), making it more difficult to resolve trade disputes.

The future of world trade

A positive sign was the agreement on a multilateral agreement on fisheries subsidies in 2022, showing that progress is possible if the political will is there. The EU launched a multi-party interim trade dispute settlement agreement in 2020 to support the functionality of the WTO.

The idea of ​​using the WTO as a forum for exchange and discussion could be a strategy to rebuild trust between member states in order to advance much-needed reforms. Experts agree that the future of global trade and the role of international trade organizations such as the WTO are closely linked, and that without substantial reform the organization will continue to be under pressure.

For more information on this topic, see the articles by Rhine Palatinate and bpb.