The US has blamed the WTO for creating global imbalances and said that it cannot be the forum to solve existing and future problems of the trading system.
- US criticized the basic principle of most-favoured nation (MFN) treatment, contending that it prevents countries from optimising individual trade relationships.
- Under MFN, countries levy the same level of tariff for a product.
Key Challenges faced by WTO
- Regulatory Lag: The WTO lacks competence in modern "economic security" matters or addressing supply chain resilience, digital trade governance and climate-related trade measures such as the EU’s Carbon Border Adjustment Mechanism (CBAM).
- Growing Imbalances: Non-market policies have resulted in over-capacity and over-concentration of production in some countries. E.g., China
- These imbalances have created dependencies and vulnerabilities for many countries.
- Dispute Settlement Crisis: The Appellate Body remains dysfunctional due to the US blocking the appointment of new members.
- Geopolitical Fragmentation: The rise of economic nationalism and trade wars (specifically US-China tensions) has led to a surge in protectionist measures that bypass WTO frameworks.
- Consensus Deadlock: The requirement for unanimous agreement has stalled the Doha Development Round for decades, prompting members to pivot toward Plurilateral Agreements among subsets of countries.
The WTO needs urgent reforms to update its rules, restore dispute settlement, etc. to remain relevant and effective.
