Absent major policy changes by the US and other great powers, the global rules-based trading system will continue to slide into irrelevance, replacing rules with power as the greatest determinant of trade relations, writes Chris Clague, associate fellow at International Institute for Strategic Studies (IISS).
The rules of the World Trade Organization (WTO) are no longer enforceable and have not been since 2019. All sides involved know this, which makes the requests, and their acceptance, indicative of the institution’s long slide into irrelevance – the equivalent of institutional death.
Barring a volte face that is almost impossible to envision, US indifference – if not outright hostility – will continue for at least the next four years. By then, it could well be too late to revive the organization. Without an Appellate Body, the dispute-settlement process is rendered illegitimate. And without a legitimate dispute-settlement process, many countries will act as if the rules no longer apply, as the US is now doing. Others are sure to follow – arguably, some have already.
In the recent past, others have likened the WTO and the global rules-based trading system to oxygen – you take it for granted until it is absent. Inequities and imbalances remain due to myriad violations and failures of the global rules-based trading system, to be sure. But the vacuum that global trade is about to enter may find economies throughout the world gasping for breath sooner than they think.