The overarching goal of the WTO is to remove barriers to trade worldwide. This is to be achieved through binding, non-discriminatory rules. Thus, the negotiation of new rules for market access is designated the first pillar of the WTO. However, since its foundation from the previous organization 25 years ago, members states have only been able to agree on one truly multilateral agreement (the Trade Facilitation Agreement) that is valid for all. The large-scale Doha negotiation round has not yet been formally concluded. This sets the path for disagreement about the way forward.

The reform gridlock threatens to make the World Trade Organization less relevant for business. After all, global trade continues to develop in a dynamic way – through technological progress, digitalisation, the growing importance of trade in services, but also the increasing significance of global competition issues linked to the economic ascent of state-capitalist China. None of these areas is appropriately multilaterally regulated in a WTO context.

Since an agreement among all WTO members does not seem promising at the present time, the EU and others are counting on plurilateral agreements among ambitious members. Such agreements could ideally lead to multilateral rulemaking at a later stage. Five years ago, plurilateral WTO negotiations for further tariff reductions on information technology products were successfully concluded.

Currently, plurilateral negotiations are being conducted, among others, on trade in services, investment facilitation, micro-, small and medium-sized enterprises and digital trade (e-commerce). The WTO can only move with the times and hold onto its relevance if it can soon demonstrate new successes.

Crisis of Transparency

Next to the negotiation of new trade rules, another important WTO pillar is monitoring of compliance with already established WTO rules. This includes the collection of trade data in order to make trends in global trade transparent and to analyse them. The entrance of the WTO onto the world stage as a think tank is often thought of as a further pillar of the organization. The foundation for monitoring and transparency, however, is that the members duly notify the trade-facilitating and trade-restrictive measures they have introduced to the WTO. This obligation to notify is unfortunately not being met adequately. For example, the number of members that have not notified subsidies has risen sharply in recent years. The number of unreported subsidies is thus presumably growing. German industry therefore supports proposals for more effective notification rules, further support measures, and new sanction options. 

Crisis of Dispute Settlement

Another central pillar of the WTO is dispute settlement, which enables member states to act against potential violations of global trade law and to systematically resolve disputes. However, since December 2019, the second instance of the dispute settlement mechanism has been paralyzed by a U.S. blockade of the appointment of new Appellate Body members. A binding resolution of current and new disputes is not possible at the moment; several reform initiatives to overcome the blockade were not able to find support from United States.

The EU and 19 other WTO members, including Brazil, Canada, and China, have therefore established a pragmatic interim solution. As of April 2020, the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) allows participants, among one another, to continue to benefit from a functioning two-stage dispute settlement system. Under the umbrella of the WTO, the mechanism provides the MPIA signatory states with an independent and binding appeals body, which will be dissolved as soon as the WTO’s multilateral Appellate Body is once again operational. To this end, negotiations with the U.S. administration must intensify and the concerns of the U.S. resolved in consensus with all other members. 

Crisis of Leadership

At the end of August 2020, WTO Director-General Roberto Azevêdo   prematurely resigned from office in order to leave the organization enough time to find a successor before the preparations for the next Ministerial Conference (planned for June 2021) must begin. Eight candidates from Latin America, Asia, Africa and Europe have joined the competition to take over the reins. By early November 2020, members are expected to agree on the appointment of the new Director-General. However, this question of leadership could end up more difficult than expected, ending in a power vacuum. Member states have already been unable to reach consensus on the question of which of the four deputies should run the business from September 2020 until the new WTO head takes office.

Nonetheless, BDI remains confident in the WTO. If a new U.S. president comes to power in January and a new Director-General of the WTO is in office, it is not unlikely that a more constructive spirit of cooperation will be restored in Geneva. All WTO members have a strong common interest in an orderly, functioning world trade system.