Built in 1995 to make trade predictable, the World Trade Organization now watches its own court stand empty and its members cut deals around it. The system that tamed tariffs is being tested by the very powers that built it.
Published 14 October 2026 · 06:00 GMT
For half a century, world trade ran on a simple bargain: countries would open their markets gradually, bind their tariffs so they could not be raised on a whim, and settle their disputes before judges rather than with retaliation. The General Agreement on Tariffs and Trade, signed in 1947, carried that bargain through the postwar decades. The World Trade Organization, founded in 1995 in Geneva, gave it teeth: a permanent secretariat, a binding dispute system, and rules that reached beyond goods into services and intellectual property. For a generation, it worked well enough that most people forgot it existed. Then the judges' bench emptied, the negotiations stalled, and the great powers began to treat the rules as optional.
The WTO now counts 166 members, after Timor-Leste joined in August 2024, which means nearly every trading nation on earth has signed the same rulebook. That is the organization's quiet miracle. Its core principles are disarmingly simple. Most-favoured-nation treatment means that a trade concession granted to one member must be granted to all, so that bilateral favours cannot harden into rival blocs. National treatment means that once an import has crossed the border and paid its duty, it must be treated no worse than the domestic product. And tariff bindings mean that a member's published ceilings are promises: a government can cut its tariffs, but it cannot raise them above the bound rate without negotiating compensation. Predictability, not free trade in any absolute sense, was the product.
The dispute system was the enforcement arm, and it was, by the standards of international institutions, remarkably effective. A member that believed another had broken the rules could bring a case. A panel of experts would rule. The losing side could appeal to the Appellate Body, a standing court of seven judges whose rulings were binding. Hundreds of disputes were filed, from bananas to steel to aircraft subsidies, and losing governments usually complied, because the alternative was authorized retaliation by the winner. For an international court with no police, that compliance record was the envy of the field.
The crisis began with appointments. The Appellate Body needs judges to function, and the United States, under successive administrations of both parties, blocked new appointments for years, arguing that the court had overreached its mandate, created obligations the members never agreed to, and taken too long. In December 2019, the Body fell below the quorum needed to hear cases, and it has been unable to function since. The dispute system did not die: panels still hear cases at first instance. But a losing party can now appeal into the void, parking the case in limbo indefinitely, and several governments have done exactly that. A court whose verdicts can be shelved by filing an appeal is a court on life support.
Part of the membership refused to accept the paralysis. The European Union, China, Brazil, Canada and others set up a Multi-Party Interim Appeal Arbitration Arrangement, the MPIA, an agreement to use arbitration as a substitute appeals court among themselves. It works, after a fashion, and it has heard cases. But the United States, the country whose blocking created the crisis, does not take part, and neither do several other large traders. The result is a two-tier system: enforceable rulings for those inside the workaround, and appeal-into-the-void for those outside it. A trading system that cannot give every member the same justice is a system whose legitimacy is leaking.
The American complaint deserves a fair hearing, because it was not invented from nothing. The Appellate Body did issue rulings that many trade lawyers considered expansive, and the WTO's consensus rule meant that members who disagreed with those rulings had no practical way to overrule them. But the remedy, blocking all appointments, punished the system rather than fixing the court. Reform proposals have circulated for years: clearer rules on precedent, tighter timelines, a mechanism for members to correct interpretations they reject. None has yet commanded the consensus needed, because the same members who want the court back disagree about what kind of court it should be.
The WTO's second crisis is its negotiating arm. The Doha Round, launched in 2001 and billed as a development round, was supposed to cut farm subsidies, open markets and write new rules for the century. It was never concluded. Agriculture, the round's heart, split the membership: exporting countries wanted rich nations to cut farm support, rich nations wanted access to developing-country markets for goods and services, and the two sides never closed the gap. Year after year, ministerial meetings ended with declarations promising to keep trying, and the round quietly faded into history without a formal burial.
That does not mean nothing was agreed. The Trade Facilitation Agreement, concluded in Bali in 2013, cut red tape at borders and was the first multilateral deal of the WTO era. The Geneva ministerial meeting of 2022 produced an agreement to curb harmful fisheries subsidies, a genuine environmental achievement years in the making, alongside a partial waiver of intellectual property rules for COVID-19 vaccines. But the Abu Dhabi ministerial meeting of 2024 ended without major breakthroughs, with fisheries subsidies' second phase unfinished and agriculture deadlocked again. The pattern is now familiar: the WTO can still deliver targeted deals, and it cannot deliver grand bargains.
Meanwhile the world has moved around the institution. Members now strike hundreds of bilateral and regional trade agreements, many going deeper on digital trade, investment and standards than the WTO's rulebook reaches. Supply-chain shocks, industrial policy, export controls on chips and critical minerals, and climate measures such as carbon border levies all raise questions the old rules were not written to answer. In 2025, the United States imposed sweeping new tariffs that strained the system the WTO was built to police, and other members debated whether to answer through the WTO, through retaliation, or through deals. The institution built to make trade predictable now presides over a landscape where the largest players improvise.
Western coverage tends to split between two stories. One is the defence of the rules: the WTO as the inheritance of the postwar order, worth saving because the alternative is a world where might makes trade. The other is frustration with the institution's inability to discipline China, whose state-led model, in this telling, exploits rules written for market economies. The Appellate Body's paralysis is read in Washington as a necessary correction to judicial overreach, and in Brussels as a self-inflicted wound that weakened the West's own best instrument.
The Western lens is also the most comfortable with the workaround of regional and bilateral deals. If the WTO cannot move, the argument runs, like-minded countries should move without it, and the system will survive as a floor rather than a ceiling. The risk, which the West acknowledges in quieter moments, is that a floor everyone can undercut is not a floor at all.
From Beijing and other eastern capitals, the story is about double standards. In this telling, the WTO's rules were written when the West dominated manufacturing, and the West now reaches for tariffs, export controls and industrial policy whenever the competition turns against it. China presents itself as the defender of the multilateral system, a champion of the MPIA workaround, and a critic of unilateral tariffs. Its own subsidies, state enterprises and market-access limits are, in this telling, development tools no different in kind from the farm support the West long defended.
The Eastern lens also notes that China joined the WTO in 2001 and grew inside the system, lifting hundreds of millions out of poverty through export-led growth. For Beijing, the lesson is that the system works, and that the countries now breaking its spirit are the ones that wrote it. The argument is self-serving and partly true, which is why it persuades.
From the Global South, the WTO looks like a promise half kept. The Doha Round was called a development round, and its failure confirmed a suspicion: that the rules were designed to open developing markets more than to reform rich-country farm subsidies. The fisheries deal of 2022 was welcomed here as proof that the system can still serve the poor, since subsidized industrial fleets from rich nations have long outfished the small boats of the South. But the broader record, in this telling, is one of lectures on openness from countries that protect their own farmers.
The Southern lens also values the WTO as a shield. Small countries cannot win a tariff war with a superpower, but they can win a case in Geneva, and the dispute system's long record of rulings for small complainants is remembered here with care. The paralysis of the Appellate Body is therefore read in the South not as an American quarrel but as the removal of the one court where the weak could beat the strong.
