The European Union’s (EU’s) recent call for “serious” reform of the World Trade Organisation (WTO) ahead of its ministerial conference in Cameroon reflects a growing recognition that the global trading order may no longer be fit for purpose.
In an era shaped by Donald Trump’s tariff-driven, protectionist trade policies, the rules-based system underpinning international commerce has steadily eroded, and has been further strained by geopolitical shocks in the form of the wars in the Middle East and Ukraine, which have heightened volatility in global markets.
EU trade chief, Maros Sefcovic has now stressed the need to better address issues of “level playing field, overcapacity and market policies”, calling for “a new balance between rights and obligations”. This is an acknowledgement that the conditions that gave rise to the post-World War II consensus that shaped, first the General Agreement on Tariffs and Trade, and later the WTO no longer exist, and that we now live in a far more fragmented, competitive global economy.
Central to current tensions is the question of China’s rise within the WTO framework. Western economies increasingly accuse it of exploiting WTO rules to build massive industrial overcapacity across industries, from steel and aluminum to solar panels and electric vehicles. It is alleged that backed by state support and abundant low-cost labour, Chinese firms have achieved scale and efficiency that allow them to dominate global markets through sustained low pricing, placing intense and often unsustainable pressures on competitors lacking similar structural advantages. It is important, however, to recognise that the WTO gaps that China is accused of exploiting were deliberately embedded into its design to benefit its original architects.
The WTO was founded on non-discrimination, trade liberalisation that dismantled tariff and non-tariff barriers, predictability and fair competition – principles credited with expanding global trade and lifting millions from poverty. But it is important to recognise that these were shaped predominantly by the priorities and interests of Western industrial powers.
Empirical evidence supports this critique. While global trade grew exponentially under the WTO regime, the initial gains largely accrued to major developed economies and, within them, multinational corporations. These firms leveraged reduced tariffs and dismantling of quotas to streamline logistics and build complex global value chains, relocating production to jurisdictions offering cost advantages, chief among them China. This boosted efficiency and lowered prices, but also hollowed out manufacturing in many developed countries, fuelling economic dislocation and political backlash.
China, on the other hand, capitalised on this model with remarkable strategic clarity, combining integration into global markets with targeted industrial policy to become the world’s manufacturing hub.
But the rules that enabled its ascent are now viewed with suspicion by those who once championed them.
The EU’s current push for reform reflects not just systemic concerns but a recalibration of economic self-interest – a natural impulse as nations have always tried to shape global rules to serve their domestic priorities. But any attempt to reform the WTO must now confront a fundamental question: whose interests will the new rules serve? If they simply entrench the advantages of already dominant economies, they risk deepening inequalities and the system’s inadequacies.
Equity, therefore, must sit at the heart of any meaningful reform agenda. This means a framework that recognises differing capacities, stages of development and structural constraints, while accounting for the uneven impact of conflict, climate change and artificial intelligence.
Developing countries must be afforded policy space to build industrial capacity, rather than being locked into perpetual dependence. A reformed WTO must preserve the benefits of open trade while ensuring that its gains are more broadly distributed. What is needed is a re-imagined global trade governance grounded in equity and fairness and responsive to geopolitical shocks and rapid technological change reshaping the global economy.
