The WTO at a Crossroads: Crisis, Reform, and the Future of Multilateral Trade Governance
By
Introduction
The World Trade Organization (WTO), once the keystone of the postwar trading order, now faces an existential crisis. The pillars that long sustained it—binding rules, impartial dispute settlement, and the principle of nondiscrimination embodied in the most-favored-nation clause— have steadily eroded. The Appellate Body remains paralyzed, multilateral negotiations are stalled, and both the United States and China increasingly flout WTO disciplines through unilateral tariffs, expansive industrial subsidies, and cycles of reciprocal retaliation.
Former US Trade Representative Michael Froman captured this anxiety when he declared in 2025 that “the global trading system as we have known it is dead.”1 Though resolutely contested by the WTO director general, this assessment resonated widely.2 It articulated what many policymakers had come to fear—that multilateralism is unraveling at the very moment when technological disruption, climate stress, and intensifying geopolitical rivalry demand unprecedented global cooperation.
…multilateralism is unraveling at the very moment when technological disruption, climate stress, and intensifying geopolitical rivalry demand unprecedented global cooperation.
The crisis confronting the WTO is not merely institutional but civilizational in scope. The postwar trading order was founded on an implicit grand bargain: international openness would coexist with domestic welfare commitments, and the United States would serve as both the principal architect and ultimate guarantor of the system. That foundational compact has now unraveled. Successive US administrations—through Obama’s cautious retrenchment, Trump’s overt confrontation, and Biden’s selective protectionism—have progressively withdrawn support from the very multilateral mechanisms Washington once designed to uphold. At the same time, China’s ascent as a global trading power has exposed enduring structural deficiencies in the WTO’s architecture, ranging from weak disciplines on subsidies to the organization’s limited capacity to oversee the conduct of state-owned enterprises.
The unraveling of the multilateral trading order reflects deeper geopolitical transformations: the retrenchment of US hegemony, the emergence of a multipolar world, and the erosion of the moral and political consensus that once sustained liberal globalization. This article traces the historical rise and gradual decline of the multilateral regime, contrasts the US and Chinese narratives surrounding its evolution, and examines both its institutional frailties and the disruptions introduced by new technologies. It further incorporates the often-neglected perspective of the Global South, whose economic prospects remain most closely intertwined with the fate of the rules-based system. The analysis concludes that for multilateralism to endure, reform must transcend procedural adjustments; it must re-anchor global openness in principles of inclusivity and domestic legitimacy.
The Rise of the Post-War Trading System
The origins of the WTO can be traced to the catastrophic collapse of world trade between 1929 and 1934, when the U.S. Smoot–Hawley Tariff Act of 1930 raised import duties on more than 20,000 products to nearly 60 percent. The measure provoked a wave of retaliatory tariffs across Europe and Canada, precipitating a downward spiral that ultimately reduced global trade by almost two-thirds.3 Determined to prevent a recurrence, post-war leaders sought to institutionalize openness through new multilateral mechanisms.
At Bretton Woods in 1944, the United States took the lead in creating the architecture for a new global economic order by establishing the International Monetary Fund (IMF) and the World Bank, and by entrenching the dollar as the reserve currency.4 In 1947, twenty-three countries signed the General Agreement on Tariffs and Trade (GATT), committing to progressive tariff reduction and nondiscrimination through the most-favored-nation principle. Over successive negotiating rounds, average tariffs on industrial goods fell from roughly 40 percent in the 1940s to below 5 percent by the 1990s. In 1995, the GATT system evolved into the WTO, expanding its scope to include services, intellectual property, and binding dispute settlement. By 2024, the organization counted 166 members, accounting for 98 percent of world trade by value.5
During the Cold War, the liberal order served both strategic and economic ends. Washington promoted open markets as bulwarks against communism, while allies in Europe and Asia accepted US leadership in exchange for access to American markets and security guarantees. The collapse of the Soviet Union in 1991 seemed to vindicate this vision. Along with containerization, the Internet, and global supply chains fostered a sense of irreversible liberal triumph. By the early 2000s, the WTO embodied what many considered the apogee of rules- based globalization.
Yet the very success of the multilateral trading system contained the seeds of its own fragility. The founders of the GATT shared broadly similar industrial structures, political systems, and developmental priorities. By 2001, when China acceded to the WTO, the membership had become far too diverse to sustain a cohesive consensus. Moreover, the liberal narrative of shared prosperity obscured widening domestic inequalities—vulnerabilities that would later manifest as populist backlash across advanced economies.
The Crisis of Multilateralism
By the 2000s, cracks in the liberal order had widened. China’s accession to the WTO in 2001 integrated hundreds of millions of workers into the global economy, reducing prices and upending production patterns. Economists Autor, Dorn, and Hanson’s seminal study on the “China shock” revealed that US regions most exposed to Chinese import competition suffered the steepest declines in manufacturing employment and wages.6
The social consequences of this economic dislocation have had profound political reverberations in the United States. Vice President J. D. Vance’s Hillbilly Elegy offers a personal narrative that illuminates the socioeconomic challenges faced by white working-class communities in the Rust Belt. Through the lens of his own upbringing, Vance links cultural attitudes and personal decision-making to persistent cycles of poverty, framing his upward mobility as an exception that underscores broader systemic decline.7
Complementing this perspective, economists Anne Case and Angus Deaton have documented the rise of “deaths of despair”—including suicide, drug overdose, and alcohol-related mortality—as symptomatic of long-term economic stagnation. They argue that the deterioration of labor market conditions — particularly the decline in well-paying jobs for individuals without a college degree — has fostered widespread social isolation, psychological distress, and a breakdown in community cohesion.8
This socioeconomic discontent has engendered a pronounced backlash against the long-dominant paradigm of economic liberalization. Under President Barack Obama, the United States began obstructing appointments to the WTO Appellate Body, citing concerns of “judicial overreach”— that is, the tendency of WTO adjudicators to interpret existing agreements in ways that extended beyond their negotiated mandates, effectively creating new obligations without explicit member consent. This gradual retreat from multilateralism intensified under President Donald Trump, whose administration adopted an overtly protectionist and unilateral trade posture. Its policies— including imposing tariffs on both allies and adversaries, withdrawing from the Trans-Pacific Partnership, and concentrating trade authority in the executive branch—constituted a direct challenge to the postwar trading order. Although President Joe Biden’s administration restored the rhetoric of multilateral engagement, it largely maintained the protectionist orientation through expansive industrial policies, most notably the CHIPS and Science Act and the Inflation Reduction Act.
This gradual retreat from multilateralism intensified under President Donald Trump, whose administration adopted an overtly protectionist and unilateral trade posture.
By the end of Trump’s first term, the WTO’s Appellate Body had been rendered effectively inoperative; by 2019, it ceased functioning altogether. The erosion of the WTO’s institutional authority was thus both cumulative and systemic—a slow but decisive unraveling of its enforcement credibility—and, with it, the normative foundations of the postwar rules-based trading system.
By the end of Trump’s first term, the WTO’s Appellate Body had been rendered effectively inoperative; by 2019, it ceased functioning altogether. The erosion of the WTO’s institutional authority was thus both cumulative and systemic
Who Is Responsible? A US Perspective
Former US Trade Representative Michael Froman, now Chairman of the Council on Foreign Relations, frames the WTO crisis as fundamentally structural. In his assessment, the global trading system is dead—its negotiations stalled, its monitoring ignored, its dispute settlement crippled.9 Froman attributes the breakdown largely to China’s state-led economic model—its extensive subsidies, pervasive state-owned enterprises, and recurring violations of intellectual property rights—which, he argues, have created a regulatory challenge far beyond what the WTO was originally designed to manage.
At the same time, Froman acknowledges a deeper political economy dimension: globalization’s benefits—manifested in lower consumer prices, expanded export opportunities, and widespread poverty reduction—were broad but diffuse, while its costs were concentrated in specific industries and communities left behind by economic dislocation. Protectionist measures, he observes, only compound these inequities. The 2018 steel tariffs, for instance, may have created roughly 1,000 jobs in steelmaking but eliminated an estimated 75,000 in downstream manufacturing sectors.10
Froman’s critique thus exposes a central paradox of the contemporary order: the United States, once the principal architect and guarantor of the multilateral trading system, has become its most consequential disruptor—driven by domestic disillusionment with the very openness it once championed. The erosion of political consensus at home has translated into institutional paralysis abroad, deepening the legitimacy crisis that now engulfs the WTO.
Who Is Responsible? A Chinese Perspective
Froman’s diagnosis of institutional dysfunction is persuasive, but his portrayal of China as the primary villain may be overstated for several reasons.
First, industrial policy and the use of subsidies are hardly Chinese innovations. Both the United States and the European Union have long deployed such instruments to advance strategic
sectors—from agriculture and aerospace to energy. The European Union’s Common Agricultural Policy remains one of the most protectionist and distortionary regimes in the global economy, while the United States’ CHIPS and Science Act and Inflation Reduction Act signal its own reversion to a form of state-led capitalism. Moreover, many Chinese subsidies—particularly those directed toward renewable energy—contribute to the provision of global public goods, notably climate-change mitigation.11 State-owned enterprises, likewise, are not aberrations; France’s EDF (Electricité de France), Singapore’s Temasek, and US defense contractors all blur public-private boundaries.
Second, concerns over intellectual property rights and technology transfer are often overstated. Joint ventures in China were, in most cases, voluntary arrangements pursued by multinational corporations seeking access to the world’s largest and fastest-growing consumer market. Firms such as Apple, Tesla, and Volkswagen have derived substantial profits from these partnerships, benefiting from cost efficiencies and scale economies unavailable elsewhere. Moreover, China has made significant strides in strengthening domestic intellectual property protection; since 2019, it has filed more patents annually than any other country, reflecting both institutional reform and the growing sophistication of its innovation ecosystem.12
Third, critics also contend that China’s continued self-designation as a “developing country” is incongruous with its position as the world’s second-largest economy. In practice, this classification is self-declared, and numerous middle-income countries have adopted it to secure special and differential (S&D) treatment under WTO rules. While China’s aggregate economic size is indeed vast, its per capita income remains significantly below that of advanced economies, providing a reasonable basis for differentiated obligations. It is noteworthy, however, that China has recently announced it will no longer seek S&D treatment in future WTO negotiations—a gesture that may signal greater willingness to assume responsibilities commensurate with its global economic standing.13
Finally, the argument that China’s persistent trade surplus stems solely from policies of overinvestment and underconsumption neglects the structural imbalances on the American side. The United States’ chronic trade deficits reflect not only Chinese surpluses but also domestic patterns of under-saving and excessive consumption. 14 It is also argued that far from destabilizing the global economy, China’s manufacturing competitiveness has exerted a deflationary influence, helping to contain global prices and contributing to significant poverty reduction. Since 1980, China has reduced its average tariff rate from above 40 percent to below 8 percent and lifted more than 800 million people out of poverty—an achievement unparalleled in modern economic history.15
In sum, the WTO’s crisis arose less from the transgressions of any single member than from systemic transformations in the global economy. The simultaneous retrenchment of US leadership and the ascent of China have unsettled the institutional balance on which the postwar trading order rested. Revitalizing multilateralism will therefore require not only institutional reform but also renewed political commitment to shared rules that reconcile openness with equity in an increasingly multipolar world.
The WTO and the Global South
The WTO’s crisis weighs most heavily on the Global South—the developing nations in Asia, Africa, Latin America, and the Caribbean—which constitute four-fifths of its membership but wield limited influence. The original GATT was a compact among industrial economies; developing nations were late entrants, often spectators rather than architects.
During the 1950s and 1960s, newly independent states sought a more equitable global economic order, articulated most prominently in the United Nations’ call for a New International Economic Order (NIEO). Their grievances—agricultural protectionism in advanced economies, instability in primary commodity prices, and inadequate mechanisms for technology transfer—remained largely unaddressed. The Uruguay Round (1986–94), which culminated in the establishment of the WTO, further entrenched existing asymmetries. While tariffs on industrial goods were substantially reduced, advanced economies preserved barriers and subsidies in agriculture, textiles, and clothing—the very sectors in which developing countries held a comparative advantage. Although restrictions on textiles and apparel were formally phased out over a ten-year period, protectionism in these areas persisted through new forms of support and non-tariff measures.
The Doha Development Round, launched in 2001, promised to redress these inequities by placing development concerns at the center of the multilateral agenda. Two decades later, however, the Round remains moribund, if not extinct. Consensus-based decision-making and entrenched domestic lobbies have stalled progress on agriculture, services, and intellectual property. Meanwhile, the principle of S&D treatment has become increasingly politicized, as the United States and other advanced members accuse major emerging economies—such as China, India, and Brazil—of exploiting privileges originally intended for least-developed countries.
For many developing nations, the bargain underpinning the WTO produced limited material gains. The promise of reciprocal market access largely bypassed the poorest and most preference-dependent economies, which continued to rely on unilateral trade preferences rather than negotiated reciprocity. Countries such as Bangladesh, Lesotho, and Cambodia benefited primarily from Generalized System of Preferences (GSP) schemes extended by advanced economies—including the European Union and Japan—rather than from the multilateral liberalization commitments embedded in the WTO framework. These arrangements, while offering temporary market access, remained discretionary, non-binding, and vulnerable to policy shifts in donor countries. Consequently, the WTO’s reciprocal system, designed to promote equality through uniform rules, in practice reinforced asymmetries between developed and developing members, deepening rather than narrowing the developmental divide.16 As these countries graduate (for example, Bangladesh is set to graduate from LDC status in 2026), they risk losing duty-free access unless alternative arrangements are put in place.
The promise of reciprocal market access largely bypassed the poorest and most preference-dependent economies, which continued to rely on unilateral trade preferences rather than negotiated reciprocity. Countries such as Bangladesh, Lesotho, and Cambodia benefited primarily from Generalized System of Preferences (GSP) schemes extended by advanced economies—including the European Union and Japan—rather than from the multilateral liberalization commitments embedded in the WTO framework.
These inequities are not only economic but also procedural. Most least developed countries (LDCs) lack the financial and institutional wherewithal to engage effectively in the WTO’s complex dispute settlement process. Fewer than 10% of all WTO cases have involved an LDC as a complainant, reflecting the prohibitive costs of litigation and the asymmetry in legal expertise between rich and poor members. In practice, the much-vaunted “rules-based order” thus risks becoming a system of rights without remedies for the weakest participants in the global trading regime.
Recognizing these disparities, the international community has advanced several reform initiatives to strengthen the procedural participation of developing countries. The establishment of the Advisory Center on WTO Law (ACWL) in 2001 marked a modest but meaningful step toward addressing the imbalance by providing subsidized legal assistance and capacity-building support to developing and least developed members. Further proposals have called for simplifying procedural rules, expanding technical assistance, and creating collective mechanisms that enable small economies to pool resources to pursue disputes. Yet these measures, while valuable, remain insufficient to overcome the deeper structural asymmetries embedded within the system. Without comprehensive reforms that address both the economic and procedural dimensions of inequality, the WTO’s “rules-based” order will continue to operate as an uneven terrain—offering nominal rights to all, but effective remedies only to the powerful.
Developing-country coalitions have long sought to recalibrate the asymmetries of the multilateral trading system by coordinating positions and amplifying collective bargaining power within the WTO. The G-20 coalition of developing nations, formed during the 2003 Cancun Ministerial, has pressed for agricultural reform and greater market access, while the G-33 group has focused on food security and policy space in domestic agriculture. Together, these coalitions have articulated the concerns of the Global South and challenged the protectionist structures maintained by advanced economies.
At the same time, South–South cooperation has expanded through a growing number of regional and interregional initiatives designed to deepen trade among developing countries and strengthen their collective influence in global negotiations. However, in the absence of a strong multilateral anchor, these efforts risk accentuating rather than bridging fragmentation in the global trading system. While such regional arrangements may yield short-term strategic benefits, they also risk entrenching a two-tiered order in which universal rules give way to overlapping— and often exclusive—regimes. This turn toward regionalism thus represents both a pragmatic response to multilateral paralysis and a reflection of the WTO’s waning centrality in global trade governance. In this evolving landscape, emerging trade and regulatory frameworks threaten further to widen existing divides between the global North and South.
The emergence of new regulatory frameworks in advanced economies further compounds these asymmetries. The European Union’s Carbon Border Adjustment Mechanism (CBAM)—which imposes a carbon price on imports based on their production-related emissions—and the proliferation of national data-localization requirements threaten to raise compliance costs for exporters from the Global South, often under the banners of environmental sustainability and digital security. Likewise, the WTO’s Joint Statement Initiative on E-commerce, a plurilateral negotiations process driven by developed members, risks evolving into an exclusive rule-making forum that marginalizes developing countries from shaping the governance norms of the digital economy. Together, these trends underscore the growing fragmentation of the global trading order and the urgent need to restore an inclusive multilateral framework that balances efficiency with equity.
These dynamics highlight a deeper structural challenge: as trade governance fragments into overlapping regional and regulatory regimes, the WTO remains the only institution with the mandate and legitimacy to reconcile globalization with development. For the Global South, its survival is therefore not a matter of nostalgia but of necessity. Despite its limitations, the WTO provides the sole universal forum for mediating the interests of advanced and developing economies under agreed rules. Yet preserving this role requires more than procedural reform—it calls for a democratization of governance. Leadership must rotate to reflect geographic diversity, dispute-settlement capacity must be strengthened for least-developed members, and rule-making must acknowledge the heterogeneous development needs and institutional capacities of states.
Leadership must rotate to reflect geographic diversity, dispute-settlement capacity must be strengthened for least-developed members, and rule-making must acknowledge the heterogeneous development needs and institutional capacities of states. Without such inclusivity, the WTO risks degenerating into a club of the capable, where a few powerful economies dictate norms while the majority remain rule-takers.
Without such inclusivity, the WTO risks degenerating into a club of the capable, where a few powerful economies dictate norms while the majority remain rule-takers. Restoring its representative legitimacy and developmental purpose is thus essential if multilateralism is to endure in an increasingly multipolar world.
Institutional Weaknesses of the WTO
The WTO’s malaise is not solely the result of shifting geopolitics or economic rivalry; it is also rooted in the institutional architecture that once made it a model of consensus-based governance. The very rules designed to ensure inclusivity have now become instruments of paralysis. The following discusses some of the major weaknesses.
Consensus and decision-making gridlock
Unlike the IMF or World Bank, where voting power reflects economic weight, the WTO operates on the principle of “one country, one vote.” In theory, this guarantees equality; in practice, it gives every member—large or small—an effective veto. As membership expanded from 23 under the GATT to 166 today, the probability of unanimous agreement on complex issues such as e-commerce, subsidies, or digital taxation has approached zero.17 Even minor procedural reforms, like the appointment of Appellate Body judges, can be blocked by a single dissenting member. The result is ossified decision-making and a shift of negotiations toward regional or plurilateral arenas where consensus is easier to achieve.
The collapse of the negotiating function
Since the failure of the Doha Development Round in the mid-2000s, the WTO has ceased to perform one of its core functions: continuous trade liberalization. The “single undertaking” principle—where nothing is agreed until everything is agreed—proved too ambitious for a diverse membership.18 While the Uruguay Round reduced tariffs and established new disciplines on services and intellectual property, the Doha Round faltered under North–South divisions over agriculture and industrial policy. The institution that once drove liberalization has become largely a forum for posturing, not bargaining.
The paralysis of the dispute-settlement system
Perhaps the most visible symptom of decline is the collapse of the WTO’s appellate mechanism. Since 2019, the Appellate Body has lacked the quorum to issue rulings due to the United States’s block on new appointments. The de facto suspension of the dispute-settlement mechanism has left the WTO unable to enforce its own rules. Members have resorted to ad hoc arrangements, such as the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), led by the European Union; however, these lack universal legitimacy and participation. Without credible enforcement, compliance with WTO rulings has become voluntary, eroding the rule of law that underpinned the system’s authority.
Limited scope and adaptability of the rulebook
The WTO’s legal framework still reflects the realities of late-twentieth-century trade—such as industrial goods, tariffs, and quotas—rather than the digitalized, service-driven economy of the twenty-first century. Emerging issues such as e-commerce, carbon border adjustments, artificial intelligence, and data governance lie largely outside its remit. The inability to update the rulebook has encouraged unilateralism; nations increasingly turn to domestic legislation or regional agreements to fill the vacuum.19
Legitimacy and perception gap
The WTO’s legitimacy crisis is as moral as procedural. In many developing countries, the institution is perceived as serving the interests of the powerful, while in advanced economies, it is blamed for offshoring and inequality. Globalization’s benefits have been diffused and delayed, while its costs—such as factory closures, wage stagnation, and regional decline—have been immediate and concentrated. This asymmetry has fueled populist nationalism and undermined public trust in open trade.
In short, the WTO is a twentieth-century institution attempting to govern a twenty-first-century economy. Its rules, procedures, and scope have not evolved sufficiently to match technological, geopolitical, or developmental realities. Without structural reforms, modernizing the rulebook, and restoring the integrity of dispute settlement, the WTO risks fading into irrelevance, replaced by fragmented regional and bilateral regimes.
WTO Reform Proposals
While there is broad consensus on the need for reform, visions for achieving it diverge sharply. One influential proposal is advanced by Michael Froman, who advocates what he terms open plurilateralism. This framework allows “coalitions of the willing” to negotiate agreements on issues such as supply chains, environmental goods, and technology standards, thereby circumventing the WTO’s paralysis under its consensus rule. However, such selective coalitions risk marginalizing developing and emerging economies that lack the institutional or regulatory capacity to meet elevated standards. In doing so, they may reinforce what some have aptly described as “gated globalization,” a system that privileges insiders while excluding those unable to cross its regulatory thresholds.20
An even more exclusionary vision of globalization—especially for poorer developing countries—is articulated by Emily Kilcrease and Geoffrey Gertz. They propose a “concentric circles” model of globalization centered on US strategic interests. In this framework, the innermost circle would comprise deep economic integration with close allies; the middle circle would involve rule-based, predictable trade relations with most other nations; and the outermost circle would consist of restricted, “de-risked” engagement with perceived adversaries such as China. While designed to reconcile economic openness with national security concerns, this model effectively institutionalizes hierarchical globalization, marginalizing countries outside the privileged inner circles.21
However, this stratified approach carries significant geopolitical risks. Countries excluded from the inner circles may interpret their marginalization as a deliberate act of economic containment For developing nations, especially those seeking greater integration into global markets, such exclusion could foster resentment and reduce incentives to cooperate within multilateral institutions. The perception of a gated global economy—where access is contingent on ideological alignment or economic heft —may undermine the legitimacy of liberal trade norms and accelerate the fragmentation of the global order.
In response to the erosion of global governance consensus, Singapore’s Senior Minister Lee Hsien Loong has advanced a pragmatic framework for sustaining international cooperation, which he calls the “World minus one” model. This approach contends that multilateralism should not be contingent upon the participation of any single major power—particularly the United States. Even if a dominant actor withdraws, the rest of the international community must continue to uphold and evolve cooperative frameworks. Regional initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) embody this ethos of inclusive and resilient multilateralism.22 Economist Anne Krueger offers a complementary perspective. She advocates a “coalition of the willing” among like-minded economies—comprising the European Union, CPTPP members, and other reform-oriented WTO members—to coordinate their policies and sustain rule-based trade. Should the WTO remain paralyzed, Krueger suggests establishing a new global trade organization grounded in the WTO’s Articles of Agreement, thereby preserving its core principles while circumventing institutional deadlock. 23
There are also other reform proposals advanced within the existing WTO framework that reflect the heterogeneous priorities of its member states. India underscores the need to preserve national policy space and strengthen digital sovereignty as integral to developmental autonomy. 24 South Africa emphasizes the equitable implementation of TRIPS waivers to enhance global access to essential technologies and promote distributive fairness.25 China advocates for greater clarity and predictability in anti-dumping and subsidy disciplines, while simultaneously defending the developmental role of state-owned enterprises within its mixed economic model.26 The European Union, by contrast, promotes a reform agenda that links trade governance with broader goals of climate sustainability and inclusive growth.
Furthermore, the European Union has taken the lead in proposing changes to the WTO’s decision-making process—most notably by advocating the replacement of the consensus rule with a double-majority system, requiring the support of 65 percent of member states representing 75 percent of global trade. 27While members differ in emphasis—some prioritizing policy space, others digital sovereignty or climate alignment—a common thread unites these reform efforts: the need for an inclusive, flexible, and development-sensitive multilateral order. The enduring challenge, therefore, is to reconcile efficiency with legitimacy—to advance institutional reform without undermining the participatory foundations of global governance. Looking ahead, the WTO’s continued relevance will depend on a reform agenda built on three interdependent pillars: first, restoring its dispute-settlement mechanism through a credible and depoliticized appellate process; second, updating its rulebook to address emerging domains such as digital trade, data governance, and carbon-border adjustments; and third, enhancing the institutional capacity of developing economies, ensuring that their participation in rule-making is substantive rather than merely symbolic.
…the European Union has taken the lead in proposing changes to the WTO’s decision-making proacess—most notably by advocating the replacement of the consensus rule with a double-majority system, requiring the support of 65 percent of member states representing 75 percent of global trade.
Beyond Trade: The Technological Disruption
Even if the global trading system were revived tomorrow, the forces shaping the next crisis may arise not from tariffs or subsidies but from technology itself.28 The next wave of disruption— driven by automation, artificial intelligence (AI), and digital platforms—is already redrawing the boundaries of production, employment, and comparative advantage.
The world is entering what some scholars call Globalization 4.0, characterized by the fusion of digital technologies with trade and finance. Unlike earlier manufacturing-based globalization, which moved physical goods across borders, this phase moves intangible value: data, algorithms, design, and digital services. Yet the WTO’s rulebook remains anchored in a material economy of goods and tariffs. Rules that once stabilized trade are increasingly irrelevant in a world where companies export code instead of cars.
Automation threatens to displace tens of millions of workers worldwide, particularly in developing countries dependent on labor-intensive exports. McKinsey estimates that as many as 400–800 million workers could be displaced by automation by 2030, with the steepest effects in hubs such as Bangladesh, Vietnam, and Mexico.29 For economies whose development strategy relies on low-cost labor and export-led growth, the challenge is existential: how does one compete when machines are cheaper than people?30
The digital divide compounds these risks. Advanced economies dominate AI research, cloud computing, and data infrastructure, while most developing nations remain consumers rather than producers of digital technology. Cross-border data flows, now surpassing global merchandise trade in value, are governed not by the WTO but by a patchwork of national laws and private standards. Without an international framework, digital trade risks reproducing the same asymmetries that once marked industrial trade: a few rule-makers in the North and many rule- takers in the South.
New frictions emerge as states weaponize technology for security and geopolitical advantage. US–China restrictions on semiconductor exports, the EU’s Digital Services Act, and proliferating data-localization policies are fragmenting the digital economy into rival blocs. The WTO’s e- commerce negotiations, launched in 2017 but really began in 2019, have stalled amid deep disagreements over data sovereignty and privacy—reflecting the broader ideological divide between open data flows and digital protectionism.
The coming disruption will test not only economic resilience but also social cohesion. The backlash against globalization in the 2010s stemmed from job loss and inequality; the next may be driven by technological exclusion—when millions are left behind by automation or denied access to digital skills. Renewed multilateralism must therefore link global trade governance with domestic adaptation. Open markets cannot endure if citizens view openness as a threat to dignity and security.
Sustaining globalization in the age of artificial intelligence demands a dual transformation. At the international level, it requires modernizing the rules governing digital trade, cross-border data flows, and intellectual property to ensure openness and fairness. At the domestic level, it calls for robust investment in education, reskilling, and social safety nets to equip societies for technological disruption. Absent such alignment between global governance and national policy, the world risks sliding into an era of digital mercantilism—where innovation serves as a new form of protectionism and inequality deepens both within and among nations.
Conclusion
The WTO stands at a critical crossroads. Its dispute-settlement mechanism remains paralyzed, the consensus rule constrains institutional reform, and escalating great-power rivalry continues to erode the cooperative foundations of multilateralism. Yet the disintegration of the WTO would most severely penalize those who had the least voice in shaping its rules—the developing world.
For multilateralism to endure, reform must transcend procedural and technocratic adjustments. It must re-anchor openness in both global inclusivity and domestic legitimacy. A durable trading system requires not only that developing-countries gain a meaningful stake in rule-making, but also that citizens everywhere are protected from the dislocations of technological and structural change. Without such renewal, the rules-based order that once underpinned shared prosperity risks fragmenting into a new mercantilism—one governed not by power and coercion but by norms and consent.
A durable trading system requires not only that developing-countries gain a meaningful stake in rule-making, but also that citizens everywhere are protected from the dislocations of technological and structural change.
Against this backdrop, Singapore’s “World minus one” model—or Anne Krueger’s complementary framework of global trade organization—offers a pragmatic way forward: a flexible organization that remains open, inclusive, and anchored in shared rules rather than exclusive blocs. Only by reconciling efficiency with equity—and cooperation with legitimacy— can the WTO evolve from crisis to renewal and preserve its role as the cornerstone of a fair and stable global trading system.
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Endnotes
1 Michael Froman, “After the Trade War,” Foreign Affairs (September–October 2025.).
2 Ngozi Okonjo-Iweala , “A Stress Test for Global Trade,” Financial Times, September 4, 2025.
3 Douglas Irwin, Peddling Protectionism: Smoot-Hawley and the Great Depression (Princeton, NJ: Princeton University Press, 2011).
4 M. G. Quibria, “Shifting Geopolitical Sands: Bangladesh in Global Trade,” The Bangladesh Development Studies 46, no. 3–4 (2023): 1–33, https://doi.org/10.57138/SFJZ2124.
This article also provides a brief history of how the tide of globalization waxed and waned with the rise and fall of geopolitical multipolarity .
5 WTO Secretariat, Annual Report 2024 (Geneva: WTO, 2024).
6 David Autor, David Dorn, and Gordon Hanson, “The China Syndrome,” American Economic Review 103, no. 6 (2013): 2121–68.
7 J. D.Vance, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis (New York: Harper, 2016).
8 Anne Case , and Angus Deaton, Deaths of Despair and the Future of Capitalism. Princeton: Princeton University Press 2020.
9 Froman, “After the Trade War.”
10 Karen Russ and Laura Cox, “The Steel Tariff Jobs Puzzle,” Brookings Papers on Economic Activity (2019).
11 Aaditya Mattoo and Michele Ruta, Subsidies, Trade, and International Cooperation (Washington, DC: World Bank, 2022).
12 World Intellectual Property Organization, World Intellectual Property Indicators 2022(Geneva: WIPO, 2022).
13 Reuters, “China to Forego Special and Differential Treatment in Future WTO Negotiations,” Reuters, September 23, 2025, 6:17 p.m. EDT, updated September 23, 2025,
14 Olivier Blanchard and Gian Maria Milesi-Ferretti, “Global Imbalances: In Midstream?” IMF Staff Position Note SPN/10/26 (Washington, DC: IMF, 2010).
15 World Bank, World Development Report 2020: Trading for Development in the Age of Global Value Chains (Washington, DC: World Bank, 2020)
16 M. G. Quibria, “Shifting Geopolitical Sands.” . Bangladesh ceased to be a beneficiary of the US GSP scheme in 2013 on account of labor market issues.
17 Bernard Hoekman and Petros Mavroidis, Reforming the World Trade Organization: Necessary Adjustments (Oxford: Oxford University Press, 2020).
18 Aaditya Mattoo and Joshua Meltzer, Digital Trade and Cooperation: WTO’s Challenges (Washington, DC: Brookings Institution, 2022).
19 Dani Rodrik, Straight Talk on Trade: Ideas for a Sane World Economy (Princeton: Princeton University Press, 2018).
20 M. G. Quibria, “Who Killed Global Trade? Why Bangladesh Should Care and Must Not Remain a Passive Bystander,” Financial Express, September 18, 2025.
21 Emily Kilcrease and Geoffrey Gertz, “Tell Me How This Trade War Ends: The Right Way to Build a New Global Economic Order,” Foreign Affairs, July/August 2025, published June 9, 2025.
22 Lee Hsien Loong, “Dialogue at the 69th Economic Society of Singapore Annual Dinner,” July 15, 2025. https://www.pmo.gov.sg/newsroom/sm-lee-hsien-loong-dialogue-at-the-69th-ess-annual-dinner/
23 Anne Krueger, “The case for a Multilateral Trade Organization without America.” Project Syndicate. October 27, 2025
24 European Centre for International Political Economy (ECIPE), “India and the World Economy: Policy Options at a Time of Transition,” ECIPE Policy Brief, March 30, 2025. https://ecipe.org/publications/india-and-the-world-economy.
25 Médecins Sans Frontières (MSF) Access Campaign, “India and South Africa Proposal for WTO Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19.” Briefing Document, November 18, 2020. https://msfaccess.org/sites/default/files/2020-
26 Alicia García Herrero and Gary Ng, “China and WTO Reform: What to Expect?” Elcano Royal Institute Analysis, February 22, 2024. https://www.realinstitutoelcano.org/en/analyses/china-and-wto-reform-what-to-expect/
27 Centre for International Governance Innovation , “A Tariff Crisis Is Exactly the Right Time to Reform the WTO.” CIGI Commentary, March 2025. https://www.cigionline.org/articles/a-tariff- crisis-is-exactly-the-right-time-to-reform-the-wto
28 Ngozi Okonjo-Iweala, “A Stress Test for Global Trade.” Financial Times, September 4, 2025
29 McKinsey Global Institute, Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation (New York: McKinsey & Company, 2017).
30 Daron Acemoglu and Pascual Restrepo, “Automation and New Tasks: How Technology Displaces and Reinstates Labor,” Brookings Papers on Economic Activity (Spring 2019): 1–55. They suggest that the adverse labor market consequences of automation on the US are likely to be considerably higher than those associated with international trade shocks such as the ‘China shock,’ partly because automation can impact a broader range of tasks across multiple sectors.
He is currently a Distinguished Fellow at the Policy Research Institute of Bangladesh and has held senior leadership positions at both the Asian Development Bank and the Asian Development Bank Institute. Formerly a tenured full professor at Morgan State University, he held various academic positions at leading universities across Asia, Europe, and North America. A trusted advisor to numerous international organizations, he earned his Ph.D. in Economics from Princeton University and pursued postdoctoral studies at Nuffield College, University of Oxford.
The author wishes to express his sincere appreciation to Dr. Zaidi Sattar, Chairman of the Policy Research Institute of Bangladesh, for his careful review of an earlier draft of this paper and for his insightful comments, which contributed meaningfully to its refinement.
