WTO Reform – Be Careful What You Wish For?

On 15 December 2025 the United States submitted a paper “On WTO Reform” to the World Trade Organization’s General Council.

This looks like an important moment for the future of the Organization, for at least three reasons. First, because WTO reform will be a key issue, if not the key issue, at the forthcoming 14^th Ministerial Conference to be held in late March. Will the WTO be able to convince a sceptical world that it is actually capable of positive action, or will it just be the beginning of another interminable and ultimately futile talkfest?

Secondly, the U.S. as a major trading power and architect of trade rules has both a right and an obligation to make its views on systemic issues known. Its positions and attitudes will obviously have a major bearing on the outcome of MC14 and the future of the WTO.

Thirdly, the U.S. view on WTO reform is also pivotal because so many countries (with notable exceptions) seem to be intent on appeasing it at almost any price in a desperate attempt to keep it on board. Such an emollient attitude serves to validate the opinion of USTR Jamieson Greer who, in a speech at the National Conservatism Conference in September, said: “Today, when people ask me about the WTO, I tell them: we have them right where we want them”.

The U.S. is not walking away from the WTO, at least not for now. It has paid its outstanding membership dues, a new Ambassador has arrived in Geneva, and a new Deputy Director-General has been appointed to the Secretariat from the United States. In any case the U.S. has ignored WTO rules with impunity, so membership has not been a constraint. Why would it leave and cede the field to China?

What Can We Glean?

All of this means that it matters very much what the U.S. thinks about WTO reform. What can we glean from this latest submission?

Being charitable at the outset, a certain change in tone is noticeable. The exasperated sermonising in its diatribe on “The World Trade Organization at Thirty and U.S. Interests” (published last February as part of the 2025 Trade Policy Agenda) has been modulated. At that stage there were moans about the WTO “losing its way”. Like a parent realising that it was losing control of errant offspring, the U.S. warned that  “…the WTO has not matured. The same behaviors continue to go uncorrected” and “…patience is wearing thin”.

In comparison, this latest submission is somewhat less rhetorical and more collegiate in tone and, while still didactic, attempts to offer rational critiques.

The U.S. paper does not however offer upfront a coherent vision of what the WTO should be and of its place in the world trading system. We are left to infer that from the various specific comments and proposals.

In the introductory section, the U.S. says that it has serious concerns with the trading system “embodied by the WTO”, given that the system has overseen and contributed to severe and sustained imbalances. Nevertheless, “the United States considers the WTO to be one of the tools available to economies”, without elaborating on what else is in the toolbox and what the role of individual tools, including the WTO, might be. The U.S. also suggests that collective reform efforts should be directed to making changes that recognise the limitations of the Organization and strengthen what members can realistically achieve through it. In that vein, the paper has three substantive sections –

1. “issues raised by the reform facilitator”;
2. “other problems at the WTO that need to be addressed”; and
3. “problems the WTO cannot address”.

The first of these refers to ongoing consultations under the aegis of the accomplished Norwegian ambassador to the WTO who has been appointed as facilitator on WTO reform. The U.S. picks out three specific issues for comment.

Plurilaterals

The U.S. makes a strong case for the WTO to be more flexible in accommodating plurilateral agreements among subsets of members – that is, in the U.S. view, where the “benefits and responsibilities are limited to consenting parties” (i.e. non-MFN). Currently this pathway is blocked by a requirement of consensus among the whole membership to add a plurilateral agreement to the WTO legal framework.

While many would sympathise to an extent with this suggestion, others might worry that a blank cheque for blatantly discriminatory plurilaterals could result in the system dissolving into a network of competing clubs, with individual major trading powers acting as gatekeepers for their own grids of agreements. To many, this will look like a recipe for fragmentation and subordination.

That might work for the U.S. with its ability to impose its will on smaller players, but the many countries in the latter category could well have understandable misgivings. Some distinguished commentators have championed greater flexibility for plurilaterals in the WTO framework alongside a code of conduct to try to ensure that the subject matter of any agreement is broadly in line with the aims of the Organization.

Special and Differential Treatment

The U.S. had the wind taken out of its sails by China’s clever unilateral declaration last September that it will not seek new special and differential treatment in current and future WTO negotiations.

Nevertheless, the U.S. still lands some telling blows on the way the concept of such treatment has been magnified and expanded in WTO negotiations in recent years: “The United States would expect that Members who preach about the importance of the rules-based multilateral trading system to be disciplined by those rules, not exempt from them”. This argument would, of course, carry even more weight if the U.S. itself followed the rules.

‘Level Playing Field’ Issues

The U.S. makes valid criticisms with regard to widespread poor compliance with notification obligations – one of the basic obligations of membership. The resultant lack of transparency hinders the WTO’s surveillance function and inhibits negotiations. Elsewhere in the paper, however, the U.S., rather bafflingly from a business perspective, appears to criticise calls for predictability and stability in the trading system.

Under its second heading of “other problems at the WTO that need to be addressed”, the U.S. focuses on three issues.

Most-Favoured Nation (MFN) Principle

According to the U.S., the MFN principle seeking to prevent discriminatory trade practices was designed for an era of deepening convergence among trading partners. That era has passed and been replaced by an era of deepening divergence, rooted in some countries’ unwillingness to pursue fair, market-oriented competition and insistence on maintaining economic systems that are fundamentally incompatible with WTO rules.

The U.S. does not propose any specific course of action, beyond saying that “trading nations must be able to treat different trading partners differently” and that “it is time to recognize the necessity of allowing all Members to enter into mutually beneficial arrangements that may not extend to every Member”.

While there are already a number of legal exceptions to MFN (e.g. GSP schemes, regional trade agreements and some trade remedies), the U.S. does not seem to be proposing expansion of these.  Rather, the inference is that the WTO should abandon this foundational principle completely, presumably with respect to both market access and rules. In the latter context, non-discrimination is the major plank of many WTO agreements including, for example, SPS and TBT. Gutting them of the MFN principle would render them largely ineffective and could open the door to regulatory chaos.

Role of the Secretariat

The WTO Secretariat must have seriously annoyed the U.S. in recent years because it is scathing about alleged mission creep (including even trade research). The U.S. sees the Secretariat’s role as “fundamentally administrative”. It does not want it to undertake any initiative unless specifically authorised by the membership (by consensus).

It’s possible that, once again, this attitude stems from frustration at loss of control. In the good (or bad) old days, long gone, the role of the Secretariat tended to be seen by the U.S. as essentially to keep the membership in line. It may find it difficult to accept that nowadays the Secretariat has many masters.

The U.S. claims that several other countries share its concerns but few would go so far as the U.S. in terms of constraining the Secretariat. The vast majority still see the Secretariat as a repository of impartiality and neutral technical advice.

Essential Security

The U.S. has nothing to say about dispute settlement in the wider sense. From this it would be sensible to infer that it is happy with the demise of the Appellate Body.

It is however very seriously concerned that panels have interpreted WTO rules to find that the WTO has authority to judge actions taken by members on grounds of “essential security” (primarily under the security exceptions in Article XXI of the GATT). The Trump administration has invoked this provision on several occasions and considers that each country has the sovereign right to take any action necessary to protect its essential security interests. The U.S. therefore proposes that WTO members should adopt a shared understanding to prevent any “second-guessing” in this regard.

While many would agree that essential security is a matter for self-determination by the country concerned, the GATT does refer to various contextual matters – for example whether an action is taken in time of war or other emergency in international relations. Again, a broad interpretation might seem reasonable but should a unilateral determination of the existence of an emergency be unchallengeable?  What if a country fabricates an “emergency” for protectionist or political purposes?

In the past this difficult question was managed or circumvented through self-restraint. The problem with the U.S. position is that it would potentially provide a ‘free pass’ for any and all non-WTO consistent actions by all players, creating an enormous breach in the rules.

Problems the WTO Cannot Address

The third section of the U.S. paper lists “Problems the WTO cannot address” on the grounds that it is not a viable forum in which to do so. The subjects in this category are:

• Imbalances
• Overcapacity and Overconcentration of Production
• Economic Security
• Supply Chain Resilience

On overcapacity and overconcentration of production, the U.S. claims to have tried to address the problems through the WTO machinery and dispute settlement but had no success. In its view there is little point in further pursuing the matter multilaterally unless the targeted members are prepared to agree to fundamental changes in their economic systems. Some commentators have felt however that the U.S. might have been more persistent in its efforts to date.

We are left to speculate on how else the U.S. would pursue these issues outside the WTO. The obvious channel would seem to be more bilateral trade deals – which might however be inconsistent in various respects with WTO rules.

The U.S. is within its rights in counselling against the WTO addressing such issues and may refuse to engage if it so wishes. However, since these issues pertain very closely to trade policy it is difficult to argue that other members cannot raise them in the WTO if they wish to do so. The U.S. could take more destructive action, such as blocking the adoption of meeting agendas, but that would seem counterproductive – unless its intention is to paralyse the Organization completely.

Be Careful What You Wish For?

“It is a truth universally acknowledged” (to quote the opening words of Jane Austen’s novel Pride and Prejudice on this, the 250^th anniversary of her birth) that the WTO is in want of serious reform. All agree on that but the question is, what reform?

What would a WTO reformed in the way the U.S. suggests look like?

The answer appears to be that it would be a miserable remnant or rump of the Organization that was created in 1995. Discrimination would be the prevailing rule, with no recourse to effective dispute settlement. Important aspects of trade policy would be off limits. Negotiations would be the subject of carve-ups by major trading powers. The Secretariat would be purely administrative. The only role would seem to be to receive and disseminate notifications, though why anyone would bother to notify anything in such a useless environment is not clear.

In other words, far from becoming more relevant, the WTO would be well on track to wither and die. Is it in fact conceivable that the U.S.’s game plan is to bring that about?

The question needs to be asked: is this the right time to launch a process to reform the WTO?

Postscript

A veteran trade negotiator with an excellent memory recently drew attention to a 1982 GATT Ministerial Declaration in which much of the language is eerily applicable to today’s circumstances. Then, the CONTRACTING PARTIES recognised “that the multilateral trading system…is seriously endangered. In the current crisis of the world economy…protectionist pressures on governments have multiplied, disregard of GATT disciplines has increased and certain shortcomings in the functioning of the GATT system have been accentuated”.

The solution back then was to reaffirm GATT obligations including the MFN clause, to commit to preserving the system, and to ensure that the GATT would provide a continuing forum for negotiation. The Uruguay Round was launched a few years later.

Clearly we are not in anything like that situation at present. History does not repeat itself. That said, can we take some inspiration or at least hope that, with hard work and perseverance, the wheel will turn full circle again?