The year 2025 has gone down in history as a year of geoeconomic turbulence, with US President Trump playing fast and loose with tariffs. However, the year ended with the US tabling a paper on the reforms the WTO requires to ensure its sustenance in the geo-economic world order. While the tariffs that the US administration imposed on all exports into the country since April 2, 2025, have violated the principles of the World Trade Organisation (WTO), such as sticking to the bound tariff levels and applying tariffs equally to all members, the WTO reforms suggested by the US have got a couple of things right and a few wrong.
The WTO has been going through an obvious decline for a while, especially since the US began blocking judicial appointments to its Appellate Body. Along with that, the fact remains that the WTO’s multilateral system has been unable to secure successful negotiations since the 1994 Uruguay Round. The WTO’s chronic failure to address the evolving challenges of the current trading order, including China’s oversupply and the WTO’s own paternal figure, the US, challenging the very foundational principles of the organisation through its series of tariffs, has further weakened the system of equal treatment for all and non-discrimination.
In the reform paper submitted by the US, it has got a couple of things right.
First, WTO members willing to consent to a new obligation should be able to reach an agreement among themselves. One reason the WTO has failed to successfully negotiate is the consensus principle, that all of its 166 member countries are required to consent before adding a plurilateral agreement to their legal framework. By allowing plurilateral agreements, like-minded trading countries might be able to engage in fair, reciprocal trade within the WTO framework. This does seem like a good proposal, provided that there is a code of conduct and a functional Appellate Body to provide checks and balances.
Second, the proposal to limit the Special and Differential Treatment (SDT). The SDT principle in the WTO exempts the developing and least-developed countries from certain commitments to account for different stages of development. However, China’s continued status as a “developing country” has irked many member countries until last September, when China announced that it no longer seeks SDT. The US reform proposal suggests that SDT should be limited to the neediest countries. While this will be unacceptable to many countries that benefit from the SDT, it might be a good way to push countries to open their economies and follow the rules-based order.
However, the reform agenda has to be taken with a pinch of salt as it refuses to speak about the dispute settlement or the revival of the Appellate Body. Also, the Trump administration has been happy to use the security exceptions in the WTO framework, which allow each country to exercise its sovereign right to take any action necessary to protect its essential security interests. The problem arises, however, when these security exceptions are used to support protectionist interests, as seen now with the US itself invoking national security as an excuse for restricting imports into the country.