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WTO Urges Reform of Global Trade Rules Amid Growing Fragmentation Risks
By Drooid · · How we work
WTO Urges Reform of Global Trade Rules
The World Trade Organization (WTO) has called on its 166 members to overhaul the multilateral trading system, warning that failure to act could lead to a fragmented global market that would depress economic output and harm poorer nations. The appeal follows an unsuccessful ministerial meeting in Yaounde, Cameroon, earlier this year and the subsequent relaunch of negotiations in Geneva on decision-making, dispute settlement, subsidies and state intervention.
Background: Stalled Reform Efforts
The WTO’s annual report notes that existing rules have struggled to keep pace with shifts in economic power, the rise of industrial policy, digital trade and heightened political tensions between major powers. A plurilateral agreement on baseline digital-trade rules was adopted in March, bypassing opposition from some members, but broader consensus on reform remains elusive.
Economic Impact Scenarios
WTO economists modelled two fragmentation scenarios:
- In a moderate split into competing geopolitical blocs, global GDP would be 5.1 % lower and exports 18.6 % lower by 2050.
- In a severe collapse of multilateral cooperation, GDP could fall 6.9 % and exports shrink nearly 27 %.
By contrast, enhanced multilateral cooperation could raise global GDP by 2.9 % and boost exports by almost 18 %.
The report also highlights that the share of global merchandise trade conducted under WTO most-favoured-nation (MFN) tariff terms has slipped to about 72 %, down from roughly 80 % in 2022, a trend the WTO describes as “worrisome.”
Official Statements & Responses
Rob Staiger, the WTO’s chief economist, told Reuters that the trading system is at a “critical juncture,” citing broader distribution of economic power, growing state intervention, digitalisation of trade and rising political friction as four major challenges. He added that WTO rules help limit discrimination against non-members and constrain how free-trade agreements are structured. The organization also warned that trade-policy uncertainty has reached unprecedented levels as governments increasingly deploy tariffs, subsidies, export controls and industrial policies.
Verbatim Quote
“The rules are under strain and they really are having an impact. And if things fell apart at the global multilateral level, our scenarios are saying these would be the costs, and those costs would be quite large,” — Rob Staiger, crossroads WTO chief