Can the World Trade Organization Survive a Polarizing World? Three Possible Futures for the Global Trade and Investment Regime

At the 12th Ministerial Conference (MC12) in June 2022, trade ministers representing the 164 member countries of the World Trade Organization (WTO) met for the first time in four years amid an ongoing global pandemic and geopolitical forces that threaten to pull the global economy into separate blocs.

A new policy brief by Sandra Polaski, Rachel Thrasher, Veronika J. Wirtz and Warren A. Kaplan seeks to answer questions about the future of the WTO. The authors examine the historical context in which the WTO was created and how that context has changed over the intervening three decades. The policy brief also looks at specific issues that were on the negotiating table at MC12 and evaluates the outcomes, both on their merits and for insight into the ability of the WTO member states to find a compromise in a highly charged global atmosphere.

Overall, the pandemic has shown a spotlight on existing cracks in the WTO’s foundation, calling into question the future of an institution struggling to meet the demands of a world facing overlapping crises of pandemic, climate change and global economic disruption.

Given this inflection point, the authors assess possible future pathways for the WTO as a key multilateral institution. First, the WTO may continue to muddle through without serious reform. It still provides the basic rules of trade for most bilateral trading relationships, and many countries will be reluctant to let go of this fixed reference point in a global economy upended by snarled supply chains and continuing trade uncertainties. Second, the organization may be buffeted more strongly by the growing strategic rivalry between the US and China in ways that undermine even the current suboptimal global equilibrium and further destabilize the WTO. Finally, a third possible pathway for the WTO would include a more systemic transformation that opens the door for a more stable global economy and potentially less antagonistic trade relationships. This pathway involves recalibrating WTO rules to face the challenges of the 21st century and moving away from the neo-liberal, pro-market rules that launched the organization.

While the authors note that finding a new pathway that prioritizes coexistence is an enormous challenge, it is more likely to achieve economic stability and peace than the alternative of discordant trade blocs.