Authored By: James Dunne
Maynooth University
Abstract:
The EU Commission has proposed a new world trade system in response to the WTO’s stagnation since 2019, when the US blocked appointments to the Appellate Body (AB) and crippled its core Dispute Settlement System (DSS). The dysfunction is not limited to the DSS as the negotiation mechanisms have also failed to operate effectively, as demonstrated by the Doha Round deadlock since 2008. However, as Alan Wm. Wolff, former Deputy Director-General of the WTO, warns, if we tried to re-create the WTO today, we would never get back to the point we are at currently.1
In today’s increasingly protectionist environment, reviving the WTO still offers the best chance at achieving a successful multilateral trading system. This article explores reform pathways that address WTO paralysis, specifically the DSS and the consensus-based negotiating system. Drawing on expert insight and new initiatives, it argues that preserving the WTO’s core institutions while enabling plurilateral flexibility is crucial for a rules based global trade order.
Introduction:
This article examines the two key challenges faced by policy makers in the WTO: the DSS and the working practices of the negotiating system.2 Without a system to hear and adjudicate member disputes under the established international trade law or a medium for the facilitation of trade deals, countries now turn to regional arrangements outside of the WTO’s jurisdiction. Discovering potential routes to reform the WTO can help to understand the current negative impact on the organization. The purpose of this article is to examine how institutional reforms might restore the WTO’s effectiveness in mediating trade disputes and facilitating multilateral negotiations. The analysis centers on the stagnation caused by the US blockade of Appellate Body appointments and broader geopolitical shifts toward protectionism. The article is structured as follows: after presenting historical context and background, it examines the failure of the DSS, explores the flaws in current negotiating practices, and evaluates proposals aimed at reviving the WTO’s role in global trade governance.
Background:
Since its inception, the WTO has faced criticism for a number of reasons. The body was set out to facilitate the removal of barriers to trade and promote sustainable economic development through mutually advantageous arrangements, as well as the elimination of discriminatory treatment between nations. Modernized from GATT 1947, the WTO’s 1994 framework established robust mechanisms for dispute settlement and transparency, promoting fair treatment among trading partners. However, this organization falls victim to the same factors that hinder so many international bodies, as although their influence appears significant, these bodies rely heavily on member compliance. The decline in this adherence has paralyzed the WTO.
The Dispute Settlement System:
Possibly the most impressive of the WTO’s functions, the dispute settlement system since 1995 has been one of the most useful tools in international dispute mediation, adjudicating over 600 disputes3 up until the fallout in 2019 when the US obstruction of judicial appointment prevented the court from reaching quorum. The US felt that the judiciary was participating in “judicial activism”, related to cases such as United States – Certain Measures on Steel and Aluminum Products, DS548),4 where the panel rejected the US’s argument that the products in question fell under the National Security Exceptions, leading to rising tensions and the US’s subsequent refusal to remove their discriminatory measures. The US felt that the court was acting outside of its mandate. This act paralyzed the “crown jewel” of the WTO, the DSS, rendering the Appellate Body inoperable. The DSS operates through a two-tiered system: Panels handle factual findings, while the Appellate Body reviews and reports on those findings. As they can no longer reach decisions, cases concluded at the Panel level can no longer be adjudicated by the AB, sending cases into what is commonly referred to as ‘the void’, without any final verdict. The remedy for this must be to de-politicize the judicial body, and re-instill a sense of trust in the court’s ability to come to just decisions. The current US administration is unlikely to alter its position regarding this, so interim matters should be taken by members to resolve disputesthrough other WTO procedures, such as raising trade concerns in committee deliberations,5 or accept Panel judgements without the opportunity to appeal.
The Dispute Settlement issue is not the only issue the WTO faces, as the general lack of support for multilateral agreements through an ineffective negotiation medium has prevented proactive changes in the system. In the current form, consensus decision making has been the crux of the issue for several delays and the reduced effectiveness in the WTO. This requirement is understandable in theory, while in practicality it enables countries to block deals in their entirety if they feel it does not positively impact them, leading to nations using this de facto veto power to leverage countries who seek to liberalize global trade. Examples include the U.S. and South Korea blocking consensus on appointing a Director-General in 2020, and the U.S. blocking Appellate Body appointments.6 One of the most radical yet potentially effective changes would be to integrate Wolfe’s ‘club based’ solution,7 where the WTO would allow for regional trade agreements to fall under its jurisdiction, allowing participants to engage in agreements, without needing consensus from non-participating members. This would bypass the principle of non discrimination, a cornerstone of WTO law, however it could be seen as a proportionate breach of principle, as if an agreement does not affect the rights and obligations of non-participants, these agreements would allow a mechanism to exist within the WTO for parties who wish to initiate positive developments between themselves, while leaving the door open for future parties. This clubs approach would be a significant change to WTO processes, but such a change may be the reform the WTO needs to allow proactive parties to create innovative trade agreements at an international level. Although it would be difficult to integrate, creating a legal system within the WTO to mediate plurilateral discriminatory agreements would see benefits for all members, as these agreements are being made regardless, so WTO jurisdiction would allow everyone to engage in the discussions and have the opportunity to join.
Future Steps:
As confidence in the WTO declines, any move toward reform should be welcomed by advocates of international cooperation. Rebuilding trust in the dispute settlement system is a must, and input from the secretariat can bolster chances of success, as many members of civil society believe that their analysis would be a helpful aid when trying to understand the inherent complexities in trade disputes (Fiorini et al, 2020)8. Assessment of the consensus rule for commencing multilateral negotiations should take place, where a former counsellor at the WTO suggests that a double majority rule would better reflect the reality of global trade, with decisions requiring the approval of at least 65 per cent of voting members representing 75 per cent of global trade.9
Some international bodies have begun to assess the possibility of overhauling the multilateral medium for international trade, as the WTO has been unable to recover from its difficulties for a number of years now. President of the European Commission Ursula von der Layen has recently discussed the opportunity to establish a structured trade cooperation with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), thus bypassing the DSS of the WTO and its related issues.10 Another remedy taken by fragments of the international community has been the creation of the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), a body that temporarily replaces the AB’s function for its participants. The lack of consensus on a number of issues has led to countries opting for regional trade agreements, decreasing WTO oversight on international trade.11
Discussion:
This analysis of factors impeding the WTO from moving forward with its objectives is non exhaustive, as the WTO is fighting battles on many fronts in this new era of economic uncertainty. Recovery for the WTO is one of its greatest challenges to date, as wider societal considerations prevent countries from collaborating. This approach from some of the most salient countries puts international organizations in a difficult position, as authority only exists for those willing to accept it, and with superpowers like the US, Russia, and China becoming more uncooperative, the time for reform has never been more important. The WTO must place parties who still strive to find mutually beneficial solutions first, allowing them to set examples for other nations. Making their powers and structures valuable to those who now ignore them is the most effective way to bring them back into an international community that wishes to globalize in a non-discriminatory way, with a rules based and transparent approach. By building trust in the DSS and reopening negotiating tables by taking away the leverage inherent in the consensus system, the WTO can become a valuable player in facilitating positive international economic development.
Conclusion:
This article has addressed the inadequacy of the current WTO approach to regulating international trade law regarding the dispute settlement system and the best practices for facilitating negotiations at a multilateral and plurilateral level.. The loss of trust in the eyes of the international community has been brought on by the breakdown of the Appellate Body as well as the inefficacy of its negotiating facilitation due to the consensus rule and the hindrance to plurilateral agreements caused by the non-discrimination principle. As a result, the WTO is increasingly bypassed in international trade governance, weakening its role in enforcing rules and facilitating multilateral cooperation.
A focus here is placed on the US blockage of Appellate Body appointments as a driving factor for WTO criticism, as the void created affects all parties who wish to make use of the once proficient court system. Regarding the consensus rule, this discussion also examines the potential recourse for the WTO to reinvigorate its negotiating powers among members, allowing proactive parties to create coalition-like sub-communities within the confines of WTO jurisdiction. Current methods taken by countries who would wish to see the WTO restored to a relevant position in international law were highlighted, exemplifying that even in the current state of the global paradigm, there are still those who seek to see the principles of the WTO fulfilled, such as sustainable economic prosperity and a non-discriminatory, mutually beneficial future.
Although some argue against its utility, the WTO is still one of the most important international bodies the world has to offer, and protecting its place in international law is of urgent importance to guarantee trade liberalization in the future. Rather than abandoning the WTO, these challenges should be seen as a chance to reform and preserve its core principles for a more collaborative future.
Reference(S):
Fiorini MB, Hoekman PC, Mavroidis PC, Saluste M and Wolfe R, ‘WTO Dispute Settlement and the Appellate Body: Insider Perceptions and Members’ Revealed Preferences’ (2020) 54 Journal of World Trade 667
Handley K, Kamal F and Monarch R, ‘Rising Import Tariffs, Falling Exports: When Modern Supply Chains Meet Old-Style Protectionism’ (2025) 17(1) American Economic Journal: Applied Economics 208
Hoekman B and Mavroidis PC, ‘WTO Reform: Back to the Past to Build for the Future’ (2021) 12 Global Policy 5
Hoekman B, Mavroidis PC and Saluste M, ‘Informing WTO Reform: Dispute Settlement Performance, 1995–2020’(2020) SSRN Electronic Journal
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3712618 accessed 11 July 2025
Karttunen M, Transparency in the WTO SPS and TBT Agreements: The Real Jewel in the Crown (Cambridge University Press 2020)
Torres H, ‘A Tariff Crisis is Exactly the Right Time to Reform the WTO’ (6 April 2025) Financial Times https://www.ft.com/content/a3871baa-be36-4057-ad10-a42caeaad472 accessed 11 July 2025
United States — Certain Measures on Steel and Aluminum Products (WT/DS548) Wolff AW, Revitalizing the World Trading System (Cambridge University Press 2023)
‘Let’s Create a New World Trade Organization – von Der Leyen’ (Euronews, 27 June 2025) https://www.euronews.com/my-europe/2025/06/27/von-der-leyen-touts-eu-led-alternative-to-mired-wto accessed 11 July 2025
1 Wolff AW, Revitalizing the World Trading System (Cambridge University Press 2023)
2 Hoekman B and Mavroidis PC, ‘WTO Reform: Back to the Past to Build for the Future’ (2021) 12 Global Policy 5.
3 Hoekman B, Mavroidis PC and Saluste M, ‘Informing WTO Reform: Dispute Settlement Performance, 1995- 2020’ [2020] SSRN Electronic Journal.
4 United States — Certain Measures on Stell and Aluminum Products (WT/DS548).
5 Karttunen, M. (2020) Transparency in the WTO SPS and TBT Agreements: The Real Jewel in the Crown. Cambridge: Cambridge University Press.
6 Hoekman B and Mavroidis PC, ‘WTO Reform: Back to the Past to Build for the Future’ (2021) 12 Global Policy 5.
7 Wolff AW, Revitalizing the World Trading System (Cambridge University Press 2023).
8 Fiorini, M. B., Hoekman, P. C., Mavroidis, M. Saluste and Wolfe, R. (2020a) ‘WTO Dispute Settlement and the Appellate Body: Insider Perceptions and Members’ Revealed Preferences’, Journal of World Trade, 54 (5), pp. 667–698.
9 Torres H (A tariff crisis is exactly the right time to reform the WTO, 6 April 2025) <https://www.ft.com/content/a3871baa-be36-4057-ad10-a42caeaad472> accessed 11 July 2025
10 ‘Let’s Create a New World Trade Organization – von Der Leyen’ (euronews) <https://www.euronews.com/my-europe/2025/06/27/von-der-leyen-touts-eu-led-alternative-to-mired-wto> accessed 11 July 2025.
11 Hoekman B and Mavroidis PC, ‘WTO Reform: Back to the Past to Build for the Future’ (2021) 12 Global Policy 5.
