Does the WTO Still Matter?

Summary

In late 2019, the Appellate Body of the World Trade Organization (WTO) ceased functioning after a sustained U.S. campaign to block the appointment of new judges. This marked a turning point in global trade governance. Once hailed as the “crown jewel” of the multilateral trading system, the WTO’s dispute settlement mechanism can no longer enforce compliance. The problems with dispute settlement follow the WTO’s failure to generate new agreements that link trade and development. Together with rising geopolitical tensions and U.S. dissatisfaction with the dispute settlement process, the WTO’s central role in the world trading system has been severely diminished. While the second Trump administration’s imposition of sweeping tariffs far exceeded its WTO commitments and further marginalized the organization as a forum for trade negotiations, the crisis of the WTO runs deeper than a single U.S. administration. The broader context is one of geoeconomic fragmentation: a post–Great Recession shift toward the politically driven reorganization of trade and investment, marking a departure from the integrated, rules-based multilateralism of the late 20th century. The rise of emerging economies, particularly China, has restructured global economic power. The institutional weakening of the WTO reflects this deeper structural turbulence in world order. Fundamentally, the demise of the WTO is the product of an increasingly chaotic world system, which the United States has so far been unable to resolve on terms it prefers; yet, given its economic and political power, it remains an essential actor in the trading system that cannot be marginalized without significant systemic costs. The diminishment of the WTO is but one of the costs associated with a hegemonic interregnum. Institutionally, at the center of this impasses are long-standing fault lines over development and trade protection, specifically the friction of the WTO’s disciplining of US trade defense measures and the persistence of China’s non-market practices. Because Members remain sharply divided over reform, the prospects of restoring the WTO’s legitimacy while bringing the United States back into alignment remain daunting. For these reasons, the WTO is becoming a “zombie”: it continues to exist but with diminished influence. Concessions to U.S. demands could compromise the organization’s credibility, while reforms acceptable to the broader membership are unlikely to satisfy Washington. This opens the door for China to assert greater influence and promote a more development-oriented WTO, but such a shift would provoke U.S. opposition and fall short of universal legitimacy. The zombification of the WTO carries significant risks. Without credible enforcement, the system increasingly resembles the pre-WTO era, or general international law, with all the well-known compliance challenges. As in earlier periods, unresolved economic disputes may invite political confrontation, increasing the likelihood of more serious global conflicts.