World Trade Organization Faces ‘Greatest Disruption to Global Trade in 80 Years’
The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, has warned of an unprecedented decline in the multilateral rules governing global trade exchanges. Due to U.S. tariff policies and rising geopolitical tensions, the share of trade subject to the organization’s rules has fallen to 72%, down from 80% a few years ago, a concerning indicator for an already fragile organization.
Since Donald Trump returned to the White House, the United States has intensified its imposition of tariffs on its trading partners. This has resulted in a decline in trade volume under the Most-Favored-Nation principle, which forms the foundation of the multilateral system established by the organization, further deepening tensions among major powers. Okonjo-Iweala described this situation as “the greatest disruption to the global trading system since World War II.”
An Organization in Crisis
Founded in 1995 to advocate for trade freedom, the World Trade Organization is now facing an existential crisis. Its arbitration mechanisms are paralyzed, and its authority is in question, while Washington threatens to cut its contribution by nearly $30 million, a significant portion of its annual budget of 205 million Swiss francs.
In March, the United States suspended its financial contribution, increasing doubts about the organization’s future, which has long been considered a guarantor of global trade stability.
Mixed Signals
Despite this environment, global trade witnessed a rebound in the first half of 2025, thanks to what is termed “premature concentration of goods,” prompting the organization to raise its growth forecast from 0.2% to 0.9% for the year.
However, Okonjo-Iweala cautioned that the effects of tariffs may become more pronounced starting in 2026, when accumulated inventories are depleted. This suggests that the current recovery might just be a pause before a new phase of slowdown.
A Narrow Path to Reform
In light of this situation, the Director-General is attempting to push for a reform dynamic. China, which has long been accused of excessive subsidies and unfair practices, has shown a willingness to discuss its industrial policies, potentially opening the door to a settlement. Several member countries, such as the United Kingdom, Australia, and the UAE, are calling for a rebalancing of rules and a reduction in procedural barriers.
Significant progress is expected in the fisheries file, as the agreement reached in 2022 to reduce public subsidies for this sector is on the verge of coming into force, needing ratification from just three countries. If achieved, it will be the first multilateral agreement adopted within the organization since 2017.
Okonjo-Iweala, who has begun her second term in Geneva, stated, “I’ve stopped being pessimistic, and I’ve stopped being afraid,” emphasizing her reliance on collective mobilization to restore credibility to an organization that appears, after three decades of establishment, to be in a battle for survival.
