Trade & investment

How to fix the WTO: A holistic framework for reform

  • 16 November 2023

How to fix the WTO: A framework for reform

ICC has proposed a framework that sets out a holistic vision for reform of the World Trade Organization (WTO) from the perspective of the global business community. Such a framework is necessary to ensure a comprehensive approach to reform across the three vital functions of the organisation.

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Reforming the WTO and multilateral trading system

The global business community places great importance on the WTO and the broader multilateral trading system.

More than a quarter of a century after its creation, the WTO remains the most important forum for creating, monitoring and enforcing trade rules. However, the WTO is in urgent need of reform and new rules must be written to ensure it continues to serve the needs of businesses — the ultimate end-users of the global trading system.

The global business community is deeply concerned by the steady erosion of the multilateral trading system, which imposes significant costs on business, particularly MSMEs who do not have the resources to navigate an increasingly complex and fragmented global trading environment.

Why do we need a holistic approach to WTO reform?

Proposals have been made to address many of the issues facing the WTO, some dating back more than a decade. But an effective approach to the problems and challenges facing the system must take careful account of the interconnectedness of the WTO’s three core functions, which were designed to bolster one another and carry equal weight:

Any chronic imbalance cannot be sustained — failings in one function inevitably weaken the others. Any effort to reform the WTO must address all policy, legal, and architectural issues comprehensively.

The road to WTO reform

At the 13th WTO ministerial conference (MC13) in February 2024, ICC on behalf of the global business community urges trade ministers to reaffirm the common purpose of the WTO, agree on a coherent and holistic vision for WTO reform based on the organisation’s foundational principles, and deliver on a work programme for WTO reform covering all three pillars of the organisation.

The framework’s primary aim to is to encourage WTO members to align behind common vision and work programme for reform at MC13. ICC will be issuing detailed guidance and deeper dives on specific items separately to encourage and support discussions and negotiations at relevant times..

Frequently asked questions

The WTO needs reform because all three of the WTO’s key functions are no longer working as they were set up to do when the organisation was founded in 1995. The organisation’s two-tier dispute settlement function has broken down. For over twenty years, the negotiating function has largely been at an impasse. The rulebook, which was agreed almost 30 years ago, needs to be updated to address the challenges of trading in today’s complex environment. Lastly, the monitoring and deliberative function is stiffled, resulting in failures to deliver its basic duties of transparency and oversight.

The WTO is facing six key challenges which have direct implications for the WTO’s three vital functions and the well-functioning of the organisation:
a leadership deficit,
the increasing complexity of trade policy issues,
the increasing diversity of membership, a divergence from the “common purpose” of the system as enshrined in the Marrakesh Agreement, the WTO’s foundational document, a lack of trust and rising protectionism, trade barriers and fragmentation.

A framework for reform is essential for ensuring the effectiveness of any reform discussion and change management process. Without a clear and coherent vision and blueprint, reform discussions risk overlooking key issues and failing to garner the necessary buy-in, resulting in confusion, stagnation, potential obstruction and even failure.