Trading without rules? Why WTO reform can’t fail

Intro (00:00)

Welcome to Trading Thoughts, a podcast by the International Chamber of Commerce, the world’s business organisation. In each episode, we unpack the issues, rules, and codes impacting global trade and dispute resolution. Handing you over to the episode host — thanks for listening.

[Music]

Valerie Picard (00:15)

So hello, everyone. My name is Valerie Picard. I am head of trade at ICC. So I’m your host for today’s episode of Trading Thoughts. And I’m really happy to be here. What we’re going to do today is we’re going to be exploring why global trade needs a strong and reformed World Trade Organization, and also talk about what’s at stake for business at the next Ministerial Conference, which is happening at the end of March in Yaoundé, Cameroon. So just a few scant weeks ahead of us. I’m really pleased to be joined here today by Hamid Mamdouh. So Hamid is currently senior counsel at King & Spalding in Geneva, where he advises governments and businesses on international trade law, on WTO policy. services, digital trade, I imagine other things as well. And of course, what makes Hamid’s perspective particularly valuable for today’s discussion is that he spent decades inside the multilateral trading system itself. Hamid began his career as an Egyptian trade negotiator before going on to join the World Trade Organization, where he held a number of senior roles, including notably serving for more than 15 years as director of Trade and Services and Investment Division. Hamid, thank you for joining us. Is there anything that I, did I get that right? Did I leave anything off? Have I made anything up?

Hamid Mamdouh (01:36)

No, no, you’ve captured it very well. Thank you so much for hosting me here. The only thing that you have not mentioned and I’m glad you haven’t mentioned is that I carry the burden of guilt of being one of the builders of the system. But that should not actually overshadow other things.

Valerie Picard (01:57)

So speaking of being one of the builders of the WTO system, Hamid, you’ve been on the inside, you’ve seen it evolve, and today you advise it from the outside. We hear a lot about it being in crisis. Can you tell our listeners a bit more what this crisis is about? And how did we get here?

Hamid Mamdouh (02:18)

Well, actually, this has been developing for years. Over the years, we’ve seen sort of a gradual breakdown in the three functions of the system because the WTO actually is a very unique system. It stands on three legs, what I call the tripod. The functions of the agreement is that A, it’s a group of agreements, treaties, with machinery to administer those treaties in terms of day-to-day application and monitoring and so forth. The second leg is the negotiating function. So the WTO is a forum for continuous negotiations because world trade is an evolving field and it has been seen that we need that continuing function. But of course there’s the third leg which is critical and that’s the dispute settlement leg, because this is what makes the legally binding obligations under WTO agreements enforceable through a quasi-judicial process. So these three functions have been suffering over the years from gradual erosion. Now, there are underlying reasons for that. And the reasons started with the financial crisis, actually. The first and most important one is the erosion of the leadership role among the membership of the WTO, particularly the sort of less interested role by the US, who actually played a leading role in building the system. But also, there are other factors, like the increasing complexity of trade policy issues. Things like digital trade. There are challenges in terms of how you liberalize cross-border trade while at the same time maintain regulatory sovereignty. Striking that balance requires very, very complex negotiations and rulemaking. And then of course, one of the biggest things is the increasing diversity among members over the past 30 years. And I should add here, it’s not just diversity, it’s also divergence in terms of different trade policy orientations. Now, all that, in 2025, all those accumulated problems turned into a real crisis. There’s a different level now of concern and anxiety because of what we call crisis and there are two main reasons I think new reasons which turned that long-standing problem into an acute crisis now. The first reason is the explicit disregard for WTO rules during 2025 by some of the main players, but also by other players we’ve seen of course the US has taken a very different view, but also those who have concluded agreements with the US have disregarded their obligations under the treaties that they have signed and their parliaments have ratified. Now that is basically challenging the credibility of the legal status of WTO agreements. The second factor, which I think is predominant here and we have to be very, very cognizant of, is this unprecedented integration between international trade agenda and what you might call the essential security agendas of many countries. It’s this intersection between trade relations and security relations which you rightly referred to, on various occasions, as this increasing geopolitical tensions. So that led us actually to being in this kind of crisis situation today which threatens to really lead the system towards its demise.

Valerie Picard (06:16)

So, thank you very much. I think we could continue to discuss just this very one question, the entire podcast, but coming maybe to what does this all mean for businesses, right? Because this is having a tangible impact on our members from across the world, we see it every, and we hear about it we see about it every single day. So for those businesses that are listening to this podcast today, especially those operating across multiple markets, what would a world without the WTO system mean for business? You know, is the system, at the juncture we’re in now, you know, I guess the question is, is why are we as ICC fighting for this system? And why is it so important?

Hamid Mamdouh (06:59)

I think this takes me back to the days when we were building the WTO during the Uruguay round. And one of my responsibilities then was the legal drafting of the services agreement, which was a new field. And at that time, we realized that what we’re doing actually is something that we need to make sure that responds to business needs because businesses are going to be the end users of the rules that we’re developing. And during that time, we were on daily contact at the working level with different services, businesses from professional services like accountancy, legal services, to telecommunications, to transport, to financial services, to distribution, energy. And that was a very, very intense period of interaction with private sector operators so that we understand how the rules that we are developing would affect not just the overall market situation but also competitive relationships. How would that affect the efficiency with which businesses operate? But most importantly, how best can we provide the predictability and stability which would allow businesses to have the sort of long-term vision so that they can take sound investment decisions? All these factors were very, very acutely present during that phase. Now, looking at what we have, of course, the WTO today has imperfections and it needs to be updated. We’ve been hearing about this for the past 10 years. That’s true.But a world without the WTO means a world without certainty, a world without predictability. Now, what that mean? It means actually that the opportunities for expanding businesses and the opportunity for entering new markets are going to be hindered severely by the absence of predictability and stability. And this is likely to hurt most small and medium-sized businesses because big corporations, they do have the resources to deal with uncertainties and they might have also their political connections, but the bulk of the business world today is small and medium-sized enterprises. And these are the ones I think that are going to struggle and they might find themselves with diminishing opportunities. I’m not an economist to calculate what that means exactly, but I think that’s a very dystopian kind of a situation, which I do not wish for businesses around the world whether developed, developing countries or LDCs. It would be a very, very unhappy situation.

Valerie Picard (09:45)

Hamid, you mentioned that you’re not an economist. Well, we as ICC, we went out and we found economists. We commissioned Oxford Economics to examine what a breakdown of the WTO framework could mean. And the findings were really stark. For developing economies the study found was a 33 % drop in exports and non-fuel goods exports across the board for developing economies and a drop in GDP of over 5 % driven by declining investment flows. And so we really had hoped that that study would help to focus minds on what’s at stake and we’re really very conscious of that and you know the importance you know we’ve said it before the WTO, it’s not perfect but it’s indispensable and not reforming is not an option. So for the upcoming Ministerial, we issued our call to action and in that call to action, which is very targeted, we are urging ministers to do essentially two things, to launch a structured time-bound reform process at MC14 and also at the same time to renew the e-commerce Moratorium, which is extraordinarily important to businesses and particularly small businesses across the world. Now, that said, we’re also very cognizant that MC 14 is taking place against a backdrop of geopolitical tension and economic fragility. And so we know that it is a complicated environment. So we’re sort of curious, you’re in Geneva, what’s the mood there like right now? I we hear a lot of talk about pessimism around the WTO. I think we’ve all heard, you know, people say sort of blithely, the WTO is dead. But at the same time, what we’re also seeing, and this is more positive, is that we’re seeing some convergence among members. There’s several members now that have put forth some proposals. The EU has put a WTO reform proposal on the table. The US has clarified its position. China has come out with its statement. There’s also the process run by the WTO facilitator. And others are also engaging more actively so is something shifting?

Hamid Mamdouh (12:03)

That’s a very good question, Valerie, because I think the short answer to that is yes. Something is shifting in Geneva. And I think it all goes back to what we’ve had in 2025. It’s part of human nature. We react to either threats or incentives. And I think in 2025, we’ve had a good dose of both. In terms of threats, I don’t need to explain. There was as an unprecedented threat to the credibility or even erosion, even beyond threat to the credibility of the multilateral rules-based system, the WTO agreements. At the same time, against the backdrop of the geopolitics and all the tensions that we see around us, and I think recent events, whether it was Davos or the Munich Security conference, there is a sense of a collapse of the order that we have been living in since post-World War II. Now all that is reflected in the WTO in Geneva to generate a huge sense of threat, but the sense of incentive there also is that there is a circle of members who are, I wouldn’t just say like-minded, but who feel that their future lies in having a rules-based system to protect them from the power-based environment that is prevailing now. Now, combine these two things together, I would say that 2026, over the past couple of months at least, we have seen an evolution in the mood in Geneva. 2025 generated a great deal of energy, but without a sense of direction. I think 2026 is seeing a sense of direction, particularly with MC 14 around the corner. And we see now structured processes of consultations taking place in Geneva to produce something for ministers to agree on. And you rightly referred to the ICC call for action, which I think was quite thought provoking to a lot of people here in Geneva, particularly negotiators, not just because of the sense of urgency and concerns expressed from the private sector, but also it contains some creative ideas that go right into what is needed now, which is to address the architecture of the system and address how we align the system with the new realities. Now, of course, what is happening now is putting ideas on the table. And we’ve seen three main proposals, one from the US, one from the EU, and the latest one from China. Now, of course, those three proposals from the three powers of international trade reflect a certain degree of divergence also. They’re not really going in the same direction, which is quite informative, but at least there is a factual base now that provide a huge input to the discussions that are taking place within a consultative process that is structured under the general counsel now, led by the Norwegian ambassador to the WTO, Petter Ølberg, who is consulting on WTO reform and he put on the table a draft work program to be adopted at MC 14. Now that process is due to continue, until the last general council meets on the 10th of March, which is the last meeting before the Ministerial Conference. And by that point in time, I think we can see what this process might have been able to harvest. But the mood in Geneva now, it’s a huge mix of optimism, determination, bit of pessimism, but I think at least there is an unprecedented level of focus on what is needed but also acute awareness of the urgency for action now.

Valerie Picard (16:02)

And I think that’s a perfect transition because we were, you know, coming to so we get the sense of where we are today, so there is a lot of movement, there’s a lot of work and there is some convergence. And I think, you sort of said, perhaps you know, maybe it was a slow dawning and realization, but now an acceptance of the reality. But it still comes and MC 14 is still coming at this moment of real geopolitical tension and economic uncertainty. And so what do you think in terms of the realistic expectations for this Ministerial? And what would be, you know, what would be a meaningful success for coming out of coming out of this of this Ministerial?

Hamid Mamdouh (16:45)

Well, the answer to that question depends on the level of open mindedness which is on the rise now. Because I always think in negotiations like this, it’s open-mindedness that leads to like-mindedness. And if we’re trying to promote like-mindedness, i.e. convergence, on the way ahead, then people need to be open-minded. And I think the first step for that is being taken, which is people have to be open-minded because the reality is sinking in. And basically, people are increasingly here in Geneva realizing that the status quo is not sustainable. If you want a system, the status quo is not sustainable. And although there are some voices who have been saying, well, maybe now is not the right time and we have to be careful what we wish for and this and that. I always ask the question in return: what else are you proposing? If nothing happens now, what we end up doing actually is normalizing dysfunction and that’s the worst thing that can happen. The normalized dysfunction and people would get used to the idea that we don’t have a system, so in order to, I mean inertia is not an option for that. So what should we expect? I think there are two scenarios there. One is that we might get something agreed by consensus, but probably if it is agreed by consensus, it is going to be a bit bland, because you know the more you go into a level of generality and the less concrete elements you have, the higher your chances of getting convergence. Okay, that’s the political reality. So if we end up with something like that, I think it would still need a plan B, which is something that would take this step forward and say, look, we need to look at these elements in more detail and start with a good diagnostic discussion that actually is frank, intellectually honest, and politically courageous. But I’ve started seeing elements of that in the revised version of the work programme. There is a last element there that says flexibility, i.e. whatever we adopt now, will be subject to further development. And I think this is a very, very healthy element of open-mindedness. Now, if we don’t have consensus on anything, that’s the second scenario, then there has to be a Plan B prepared for those who want to be on board without any kind of hostility towards those who don’t want to. Actually, this should be inclusive and open-ended and invite everyone to participate, everyone to be on board, from the biggest and most powerful country to the smallest and poorest LDC, and say, please, this list of ministers are adopting this work program and we invite all other members to join us as we go forward at anytime when you feel comfortable and then you really start the real work but then that’s when the real work starts because there is a lot to unpack there.

Valerie Picard (19:57)

So it’s interesting. So on the one hand, you don’t want too much specificity, but on the other hand, we don’t want the risk of overgeneralization. And so it’s finding that sweet spot. Then maybe I have a follow-up question because there’s a, because understand there’s sort of a track A, which is the multilateral track where obviously there’s a consensus, there’s a work program, work gets started with the view. And then, but then you sort of mentioned that there could also be a track B. Is there a world where you have both tracks at the same time post MC 14 or are they mutually exclusive?

Hamid Mamdouh (20:32)

No, no, I don’t believe they’re mutually exclusive. Because even in any negotiations in history, this is reality. Of course, you will hear a lot of concerns about being inclusive, about member-driven. Of course, we’ve always been inclusive. We’ve always been member-driven. I was one of the plumbers who fixed the system and built it from the 1986, when we started the Uruguay Round. Of course, I was 12 at the time. There was always that dynamic between small groups and the plenary, the full membership. And small groups used to operate in a very transparent way. The membership was transparent. What they’re discussing was transparent, what is fed into it and what comes out of it was transparent. Even for any member who wishes to join, you can join a small group. But of course if you join you are you’re you’re expected to come with a contribution. And that was based on the compelling logic of small groups. There are certain conversations that that logistically cannot take place reasonably between 166 members in the room. And of course small groups are always representative so you don’t leave any segment of the membership unrepresented in small groups. But that kind of technique is tried and it worked and everything and I hope that we can go back to these kind of dynamics which are both efficient, productive, and at the same time, inclusive and transparent.

Valerie Picard (22:12)

So I think many of us would agree with that, that inclusivity and efficiency don’t have to be mutually exclusive. And from an ICC perspective, that’s exactly why we’ve been calling for a serious, structured, time-bound reform process, and one that can build towards a meaningful outcome at the subsequent Ministerial, MC15. And you said earlier, these are difficult issues, and they require sustained work. And from the private sector side, there’s certainly a real willingness to roll up our sleeves and engage constructively in that process, including thinking about how to create, and this is really important for the private sector, a more structured space for business input at the working level, which doesn’t formally exist today. But let me turn to something which is equally, if not more, sensitive When we talk about reform, one of the real lightning rod issues right now is MFN, which is the most favored nation treatment. It’s one of the core principles of the multilateral trading system. And for listeners who may be less familiar, MFN simply means that a trade advantage granted to one WTO member must be extended to all members. It’s the principle of non-discrimination at the heart of the system. And so from a business perspective, there’s deep concern at the moment around the erosion of that principle. So Hamid, know, given the importance of MFN to business, could you help us unpack why MFN has become so politically charged at this moment? And how does this debate relate to the idea that you mentioned earlier around variable geometry with different groups of countries moving at different speeds?

Hamid Mamdouh (24:04)

I think, no of course there is no mystery about why the MFN principle is a cornerstone of the system. It has been since 1947. And it is very integral to the logic of the system itself. Because the system, unlike what some of the NGOs have espoused by way of views, the anti-globalization views, the system is not really about crowbar opening markets and viciously liberalizing different industries. It’s not about that at all. Actually, the track record of the system in terms of trade liberalization is very poor. But what the system is really about is predictability and stability so that you know, you bring your restrictions to the table and bind them. If you have a high tariff, bring it to the table and bind it, but let it stay there so that we can calculate our costs and our risks and take our investment decisions. Now, the system also is not just about opening markets, but it’s about competition and fair competition under sound regulatory rules. And this is heavily emphasized by the services agreement in the WHO. The services agreement covers 70 % of global GDP today. That’s the reality of our modern economy. 70 % of global GDP is in services. And the services agreement starts by recognizing the right to regulate. You have to regulate. But it’s also about I always joke about it, I say the services agreement is about three things. It’s about competition, it’s about competition and about competition. And it’s not about just liberalization for the sake of liberalization or unfettered liberalization. It’s not about that. Now, within that kind of logic, if you really want competition, then non-discrimination is a cornerstone. You can say I want competition because, and why do we want competition? Because of the benefits of competition. We know that. Economists would tell you a lot about that. It’s the better quality, lower prices, broader choices for consumers and industrial users and all that. All those welfare gains of competition are why we put competition as central to the system. We need a competitive environment. And without non-discrimination, you won’t have a competitive environment. Why is this sort of a cause of inflammation in the system today? It’s because the US has clearly come and said, well, MFN was based on a naive presumption. Okay, look, I’m not criticizing the US. Every country has the sovereign right to make its own choices, but according to that principle also there are those who say well, we know we’re happy with MFN. So this is where this is the kind of diversions among the membership that I’m talking about. It’s not just the US by the way who is sort of abandoning the fundamentals of the system But it’s the US has been lately most explicit about it. That’s why I refer to the US, but the US is not the only one. So that’s where the variable geometry comes in. Okay, we need now a system that offers more than one option. Because there’s a very important thing about the treaty architecture of the system. It has one treaty option based on the model of what we call the single undertaking which is you sign the WTO agreement, i.e. the Marrakesh agreement, by one signature, you are bound by all the agreements annexed to it on trade in goods, on trade in services, on intellectual property protection. I mean, there’s one little pocket there called Annex IV where you have the government procurement agreement and you have trade in civil aircraft, but that’s very, I mean, government procurement is not covered by WTO agreements anyway. But this single undertaking is the only model we have. And you apply MFN within a single undertaking model, it works perfectly well. But if you don’t want the single undertaking, which is the case now for some members, which is fine, that’s a sovereign choice, then it is logical to say, well, if that’s the case, then maybe we need to review how we apply MFN. Not to do away with MFN. Because if we’re moving to variable geometry, the reality is we would be moving to a situation where the single undertaking would not be the only option. It will not go away. Variable geometry doesn’t mean you destroy the single undertaking. It means that it would not be the only option. So we need to be creative about creating other options that would accommodate the diversity of sovereign choices that represent the current reality. Now, that’s why I think the discussion on MFN needs to be put in the right perspective in my view. First of all, there’s a point here which might be too technical, forgive me for raising it but I think it’s very important in starting any conversation about MFN, which is MFN is not really about securing identical outcomes. It’s not. It’s about securing equal opportunities. This is what non-discrimination in the treatment you treat other members. The outcomes are the result of many other factors. But we have some members today who are no longer focused on equal opportunity, but they’re focused on outcomes. If you’re only looking at trade deficit, regardless of why you have trade deficit, but you want to fix it by artificial or political decisions just to fix the trade balance, then we are in a very different territory. We’re not in a rules-based territory. We’re in a very sort of transactional. This is what we used to do with the Soviet Union way, way back, you know, 40 years ago when we had those barter agreements. I give you so much textiles, you give me so much oil. So it’s just a, it’s a departure from the kind of rules-based paradigm. Now, if you don’t want a rules-based paradigm, then of course MFN is not gonna be suitable for you. So, but these are the kind of conversations that really need to take place in a politically courageous and intellectually honest way after MC 14 and then look at what the choices are. A treaty always reflects what the parties want. This is not about forcing anyone to do anything, but also about facing the sovereign choices with their diversity.

Valerie Picard (31:05)

Okay, well, that sounds like there’s gonna be some difficult conversations to be had or creative conversations. I don’t know which lens to look at them or maybe it’s both after MC 14, but I think this issue of the MSN is so critical to business. It’s almost like the third rail in touching it. So I think it needs to your point needs to be done in a very serious and careful way when addressing it, but absolutely fundamental to business to come back to the predictability, the certainty, and also the, as you said, the opportunity. So maybe moving to the last question. If you had the, and I know sometimes you actually do, so maybe I should reframe the question in terms of when you’re speaking to trade ministers heading into MC 14, what are the one or two key messages that you think they need to hear?

Hamid Mamdouh (32:02)

I have two messages. Two messages that I truly, truly believe in. And these are my personal views. The first message is don’t think about the future of the WTO, but think about the WTO of the future because it might look different from this one. It needs to look different from this one. The second message I would say, please, please, please, do not let the crisis go to waste. Because like all crises we’ve seen in the past, it’s inherent within any crisis that you have a level of energy that you would not have in normal times. So it’s about the sober, level-headed thinking and skilful diplomacy that would channel that level of energy generated crisis into productive, sensible, do-good channels, as opposed to just stoking political rivalry and geo-economic politics. That would be my two messages to them. The WTO of the future, and don’t let the crisis go to waste.

Valerie Picard (33:20)

Well, from your lips to ministers ears, let’s hope those words are heard. Maybe, I think we’re coming to the end of, and is there anything else just before we sign off on this that you wanted to add?

Hamid Mamdouh (33:33)

The only thing I want to add here also is that I think the private sector has a critical role to play. We could not have built the WTO without the private sector. That’s the reality. It’s the private sector that forced governments in the early 80s, mid-80s, and to the launch of the Uruguay Round and throughout the Uruguay Round. It was the private sector all along that generated the political will with governments to build this system. And the private sector is badly needed now. Now, a positive note on this is what I detect among WTO members now in terms of more open-mindedness towards having more participation of the private sector in the system, because what I have been saying as one of the biggest beneficiaries in the system from my relationship with the private sector throughout the years as I explained to you and I always say having the private sector gaining some status in the WTO doesn’t mean that they will be party to negotiations or would be party to confidential meetings or would be party to decision making. No, but to be there and observe and be informed so that they can inform the system about what the system needs to know about the reality of a very complicated world. And over the past 30 years of the life of the WTO, we’ve seen more and more complexity in how business is being done through the innovative business models. And just wait until we get the full force of AI. And then you see that the real international trade field is advancing a lot quicker than how the system responds. Even national governments respond. So there is a need for that. And there are more and more members who are willing to accept that logic and consider it, so I hope that through the reform processes, this point also would be driven towards a fruitful conclusion of some kind of a status for private sector participation.

Valerie Picard (35:42)

Well, that’s certainly something that we are actively working on and would like to see as well very much. And I think it’s really nice to end this conversation on an optimistic note, which you just rang because I think we’re all facing sometimes quite difficult news and challenges every single day. And so we need a bit of optimism, so that’s a very positive note to end on. Thank you very much for having joined us, Hamid, and also to our listeners for having tuned in.

Hamid Mamdouh (36:13)

Thank you. Thank you, Valerie. It’s always a pleasure.

Outro (36:16)

That was Trading Thoughts, a podcast by the International Chamber of Commerce. Don’t forget to follow us and give us a like. Thanks for listening.