What We Should Be Talking About When We Talk About World Trade Organization Reform

Institutional reform is the headline item at the WTO’s 14th Ministerial Conference (MC14) in March 2026. Most people outside Geneva do not believe the organization has evolved at all since it was established in 1994. Change has happened, but in the form of partial, ad hoc fixes. When faced with irreconcilable disagreements, creative diplomats have developed workarounds for blockages. But we are reaching the limit of what workarounds can accomplish.

The current system of rules is facing growing pressures — from the immediate shock of recent U.S. tariff policy to impacts from long-term forces such as climate change, technological advances, and intensifying power competition. Both sets of pressures mean governments are realizing that relying on whoever is most globally competitive to provide them with the goods and services they need through an efficient global market may not be enough to meet society’s needs.

The WTO reform agenda is an opportunity for members to prepare an evolutionary leap for the organization, a leap that involves resetting some of the rules within the WTO’s system of treaties.

Working with workarounds

To take a step back, first, let’s look at how the organization has evolved. When some members refused to discuss climate change in the Committee on Trade and the Environment, sub-groups of members launched plurilateral initiatives, including the Trade and Environmental Sustainability Structured Discussions, to give themselves a space to talk about a wider range of environmental issues.

These initiatives have prospered, and interestingly, seem to be facilitating discussions of these same topics in formal multilateral committees. The lesson being that the WTO’s deliberative function can expand to cover discussions that subsets of members think are important.

The question of how new rules can be developed at the WTO is the most vexed of all the issues in the WTO reform agenda.

A workaround was also built to manage apparently irreconcilable differences in the WTO’s dispute settlement system. The WTO’s compulsory, binding multilateral system of dispute settlement is currently blocked from issuing binding decisions because of U.S. concerns that the system was overreaching. The workaround developed was the Multi-Party Interim Appeal Arbitration Arrangement.

For its 58 members, accounting for almost 60% of global trade, the Multi-Party Interim Appeal Arbitration Arrangement restores the binding nature of the dispute settlement system. So, to that extent, the workaround works well.

This means the WTO’s dispute settlement system has bifurcated based on members’ preferences: multilateral (currently non-binding) vs. plurilateral (binding). Members could make the workaround permanent by amending the multilateral system so that dispute decisions are no longer binding. Or they could hang onto the bifurcated system in the hope that those who do not want binding dispute settlement one day change their minds.

The decision above will eventually need to be tackled as part of the WTO reform process, not least because pressure is building for the renegotiation of some of its rules. If members do develop new rules, it will need to be clear whether and how those new rules are binding.

The question of how new rules can be developed at the WTO is the most vexed of all the issues in the WTO reform agenda. Over the last few years, members who have wanted to negotiate rules on new topics (e.g., e-commerce and investment facilitation) have not been able to secure multilateral agreement to these negotiations. So they went ahead anyway, and have now agreed “plurilateral” texts of treaties on both topics that would apply among themselves. They have asked for agreement from all other members to have the treaties incorporated into the WTO’s legal framework, but several members remain opposed.

This is where one of the most high-profile WTO reform issues comes up: the question of whether the principle of decision making by consensus — the obstacle preventing the plurilateral treaties above from being incorporated into the WTO legal framework — should be dropped or adjusted. The WTO rules allow for voting, but this still seems to be a Rubicon that members are not willing to cross. If members want consensus to remain the WTO’s key decision-making process, in order to include new rules in the WTO rulebook, they will need to work out how members who are blocking new rules can move forward.

This is a conversation that all members who are committed to a healthy multilateral system should be prepared to have. If the cost of getting agreement is too high compared to the value of the new rules on the table, however, that conversation will remain stuck. One way out of this situation is to put more on the table, in the form of new rules or changes to old ones. It seems that this bigger negotiation, involving some new rules and changes to old ones, is where domestic and international politics and economics are taking us anyway.

Are the 1994 rules still appropriate?

With apologies to reams of economic literature for the following simplification, the WTO agreements struck in 1994 reflect the assumption that an efficient global market was the best way to ensure a steady supply of all the goods and services societies needed (or wanted). They also assume that a government’s job is to enable its businesses to exploit their comparative advantage through trade so that consumers have enough money to buy everything they need (or want).

For countries with very limited productive capacity, this may have always been a false promise. What has changed is that the pressures of the last 10 years have made all governments, including those with considerable productive capacity, look again at that assumption.

As the 21st century looks more and more like a 2-degree world riven by geo-strategic competition, we need a new conversation about what interventions make sense for the common good, and which do not.

Some pressures have been sudden and violent. The COVID-19 pandemic made it clear that, overnight, large parts of the global market could simply grind to a halt. The Russia–Ukraine war woke Europe up to the danger of depending on a hostile power for energy. The United States’ aggressive approach to trade policy shows that the global market can be warped, suddenly and massively, by one powerful individual. Governments are responding by diversifying their trade relationships and by building politically reliable, rather than just economically reliable, supply chains.

Other pressures have been building for decades. The scale of the Chinese government’s investments in education and infrastructure, and its direct involvement in the private sector, have left many businesses in the rest of the world feeling that they are competing not with Chinese counterparts, but with the Chinese state — and frequently losing. Many developed and developing country governments have become more interventionist to avoid complete dependence on a manufacturing giant they do not entirely trust. Those with the money compete with subsidies. Those without the money compete with local content requirements import or export restrictions in an effort to build local capacity.

The other long-term pressures, which require a response beyond what the market can provide, are technology and climate change. Adapting to and mitigating climate change requires changes to economies that governments need to lead. In doing so, governments also want their own businesses to benefit from the growth of the new low-carbon economy.

Simultaneously, data is becoming a key resource endowment, with processing capacity shaping a country’s ability to add value, both to services and to physical goods. Where data describes the behaviour of individuals or critical national systems, governments can and should shape how that information can be used.

The risk here is that governments might, over the years, honour their WTO commitments more in the breach than in the observance as they increasingly intervene in their economies to achieve climate, security, or employment priorities. So far, most are trying to stay within the neo-liberal lines drawn in 1994, but as the 21st century looks more and more like a 2-degree world riven by geo-strategic competition, we need a new conversation about what interventions make sense for the common good, and which do not.

Working through issues, rather than around them

The next evolution the multilateral rules-based trading system needs may not be another workaround, but a reset of the rules governing how governments can intervene to shape trade. Subsidies to agricultural and non-agricultural products should be on the list, as should digital services and trade-related investment rules, import and export restrictions, and other topics.

Many of these ideas have been floated in the WTO reform agenda discussions already. A reset could involve tightening some rules and loosening others. It also does not mean questioning everything; commitments to non-discrimination, transparency, and predictability should always be central to a system of rules, though there may be room for clarification.

Ideally, a reset would skirt philosophical debates about what special and differential treatment for developing countries means and instead deliver practical progress. It could focus on issue-specific technical solutions of the kind we have seen in WTO agreements so far, from the Trade Facilitation Agreement to the draft additional provisions to the Fisheries Subsidies Agreement. A reset might or might not mean a new set of binding agreements; guidelines that governments actually follow are better than treaties they don’t.

Multipolar multilateralism

An active renegotiation of the most sensitive of WTO rules is not going to start immediately. The major players (the United States, the European Union, India, and China) have to want to have the conversation, and they may feel the transitional phase we seem to be in, between one global order and another, is the wrong moment to bind their hands.

They might be right. But the long-term pressures are not likely to go away. We are headed for a multi-polar world, and we will need a multi-polar approach to multilateralism to manage it. This means conversations both between the large players and among large, medium, and small players about the rules to play by. The alternative is to build a new set of rules through messy state practice involving resource-draining competition, where cooperation would have been possible, and a slowing of climate action when what we need is the opposite.

A conversation that builds a collective understanding of the changes underway, the pressures governments are under, and opportunities for collective action is the best way to prepare for the next evolutionary leap the WTO needs to make.

In the short term, governments will have to respond to immediate pressures; transparency and consideration between trading partners will help minimize further erosion of trust. In the medium term, what we need is an honest conversation, based on evidence from a range of sources about the choices and trade-offs of different trade policies. The WTO’s deliberative function has demonstrated that it has the flexibility to accommodate such a discussion, but forums and evidence-gathering of the kind IISD provides will be needed too.

A conversation that builds a collective understanding of the changes underway, the pressures governments are under, and opportunities for collective action is the best way to prepare for the next evolutionary leap the WTO needs to make. MC14 is a good moment for ministers to begin to have that more honest conversation and to sketch the outlines of the work officials need to do to prepare for real agenda-setting decisions when the time is right.

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