How the world is witnessing WTO's last stand

India Today

7 hours ago

Donald Trump's return as US president this year has already jolted the global economy. Within weeks of taking office, he returned to his favourite weapon—tariffs.Trump threatened steep duties on cars from Europe, announced plans for sweeping levies on Chinese imports and hinted at penalising Indian exports if New Delhi does not offer more 'reciprocity'. For Trump, tariffs are not merely economic measures; they are a political tool, a blunt instrument to signal 'America First', protect his base in the Rust Belt, and extract quick concessions.advertisementThis is not new. Trump's first term (2017-21) was defined by his tariff rampage. He invoked 'national security' to impose duties on steel and aluminium from allies like Canada and the EU, sparking retaliatory tariffs. He launched a bruising trade war with China, slapping duties on hundreds of billions of dollars of goods.Trump withdrew US support from the WTO Appellate Body by blocking new appointments, leaving the organisation's once-vaunted dispute settlement mechanism paralysed. He viewed the WTO as a 'catastrophe' for America and openly threatened to pull out.
The next round of the WTO Ministerial Conference (MC14) is scheduled to be held in Yaound, Cameroon, in March 26-29, 2026. Many trade economists believe the multilateral body may lose all the relevance much before that. And Trump's defiance is all to be blamed.In his second innings, Trump is doubling down. His advisors are debating a 'universal baseline tariff'—a new layer of duties on all imports. The message is clear: multilateralism is out, bilateral deals and coercive tariffs are in.This has profound implications for the World Trade Organization (WTO), the Geneva-based body that since 1995 has been the anchor of rules-based global trade. Today, that anchor is drifting. The WTO is struggling for relevance. Its negotiating function is paralysed as consensus allows single members to block agreements. Its dispute settlement arm is crippled, with appeals going into a legal limbo. And its ability to respond to new frontiers of trade—digital commerce, green subsidies, supply-chain realignment—is badly lagging. Instead, new rules are being written in exclusive clubs: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in the Pacific, the Indo-Pacific Economic Framework for Prosperity (IPEF) led by Washington, the EU's digital and climate regimes. Most developing countries are not even in the room.It is in this bleak context that CUTS International's new policy note, authored by Rajesh Aggarwal, a former trade diplomat, becomes strikingly relevant. Titled 'Reclaiming Multilateral Trading System', it offers not nostalgia for the WTO's golden age but a roadmap for its survival. The blunt thesis: if developing and mid-sized economies do not lead reforms, rules will be written elsewhere and their interests marginalised. The paper calls for a 'coalition of the willing' to drive change—countries from the Global South, along with like-minded partners, who still depend on predictable trade rules.advertisementEconomist Augustine Peter frames it crisply: 'A coalition of the willing has to start somewhere. Natural groupings have already emerged, as the MPIA (Multi-Party Interim Appeal Arbitration Arrangement) on dispute settlement showed, bringing together nearly 60 members from the EU to Brazil and China. Can India afford not to intensify interaction with this bloc?' His point is that even in the absence of US leadership, coalitions of pragmatic players can anchor reforms—if India is willing to take the plunge.Aggarwal's paper outlines a menu of reforms. First, restoring dispute settlement with a credible appeal mechanism, supplemented by flexible alternatives like arbitration or mediation. Second, easing the stranglehold of consensus by introducing evidence-based objections and critical-mass agreements. Third, rethinking the blunt 'developing country' status, moving instead to needs-based flexibilities. Fourth, embedding a digital trade framework to ensure the WTO is 'digitally fluent'. And fifth, integrating sustainability into trade without penalising late-industrialisers.advertisementHere again, Peter cuts to the chase: 'Members like Brazil, South Korea and Mexico have already surrendered their right to full developing country waivers. How long can India continue to claim blanket exemptions? The G-90's roadmap for targeted special treatment is a serious attempt—but is it appealing enough to the developed world?' His warning is pointed: India cannot indefinitely hide behind developing-country status if it wants to be seen as a leader in WTO reform.Underlying both Aggarwal's paper and Peter's interventions is a hard truth: the WTO will not be revived by Washington or Beijing. The US is increasingly transactional; China prefers regional leverage. The initiative must come from the middle—India, Brazil, South Africa, Indonesia, Mexico, the African Union. These countries have the most to lose from WTO irrelevance, and the most to gain from salvaging it.Sceptics will ask: does reform make sense when Trump is tearing apart the very trust WTO relies on? The answer, paradoxically, is yes. The more erratic Washington becomes, the more necessary it is for others to keep the platform alive. Without the WTO, disputes collapse into pure power politics. For small and mid-sized economies, even a battered WTO remains the only forum where they can contest unfair measures.advertisementTrade rule-making is happening regardless—on data flows, digital services, subsidies, sustainability. If the Global South does not engage through the WTO, it will simply inherit rules written in Brussels, Washington or Tokyo. Reform, then, is not about nostalgia but about future-proofing.For India, this debate is urgent. As one of the fastest-growing trading economies, New Delhi has a stake in rules-based order. It also aspires to shape digital and sustainability norms. But India has historically been defensive—resisting plurilaterals, reluctant on differentiation. If it wants to lead, it must recalibrate. As Peter suggests, building from natural coalitions like the MPIA could be the pragmatic starting point.The geopolitical angle is equally important. In a world fractured by US-China rivalry, a functional WTO—even a slimmed-down one—offers the Global South a collective bargaining chip. It may not constrain Trump, but it can constrain others. And at the very least, it prevents trade from sliding into complete lawlessness.The reality is sobering: the WTO will never return to its 1990s heyday. The choice now is between salvaging a platform for inclusive rule-making or letting it collapse while great powers dictate commerce in exclusive clubs. Aggarwal's call for a coalition of the willing, reinforced by Peter's hard-headed pragmatism, is not about saving an institution for nostalgia's sake—it is about survival. And perhaps, about India's moment to spearhead it.advertisementSubscribe to India Today Magazine- EndsMust Watch