Mohammed Abu Saleh*
For over eight decades, the rules-based trading system has underpinned prosperity, predictability, and global cooperation. Today, the system faces its gravest crisis, as it is being hacked by the very country that built it. Under the banner of “America First”, the United States has imposed sweeping tariffs, disregarded WTO rulings, and extracted concessions through bilateral “napkin deals.” What Richard Baldwin calls a “Great Trade Hack” is, in practice, a frontal attack on multilateralism. All three pillars of the WTO – rule-making, monitoring, and dispute settlement – are in paralysis. The question is no longer whether the WTO can preserve the rules-based order, but whether it can survive at all.
But there is also an opportunity. This crisis presents an opportunity to rebuild a fairer and more inclusive global trading system – one that prioritizes development as a fundamental pillar of the trade integration process. As Winston Churchill said, “Never let a good crisis go to waste.”
Unpacking the Crisis
The new wave of US reciprocal tariffs, ranging from 10% to 50% on imports, fundamentally undermines the multilateral system. These tariffs violate the core WTO principles, such as the Most-Favoured-Nation (MFN) obligation under Article I of the General Agreement on Tariffs and Trade (GATT) and the tariff bindings (GATT Article II). The US committed to thousands of tariff ceilings when it joined the WTO.
WTO panels have already decided that the unilateral tariff increases by the US on imports of steel and aluminum products in 2018, based on national security grounds, violate WTO rules. Yet, with the Appellate Body paralysed, the previous US administration has refused to comply, leaving the system without an effective enforcement mechanism.
Equally troubling are the bilateral arrangements Washington has struck with several countries, such as Indonesia, Japan, Cambodia, the United Kingdom, and the European Union. These deals show how tariff threats work well as a stick for one-sided concessions. Indonesia’s tariff was cut from 32% to 19% only after it removed most barriers to US exports. Japan accepted improved US market access and pledged major investments in exchange for a reduction of tariffs from 25% to 15%. The EU agreed to eliminate nearly all tariffs on US goods and undertake large purchases of American natural gas to avoid even higher duties than the current 15%.
Such concessions, unless extended to all WTO members, directly risk violating the MFN principle. They could be justified only as Free Trade Agreements (FTAs) under GATT Article XXIV, which requires reciprocal liberalization of “substantially all trade.” These deals, however, move in the opposite direction. Rather than pursuing reciprocal tariff reductions, the US maintains an average import tariff of around 18%, while its partner countries are required to eliminate or substantially lower tariffs on US exports. Such asymmetric arrangements fall short of the definition of a traditional FTA.
By accepting these deals, partner countries pave the way for a new trade architecture that prioritizes coercion over fairness. The message is clear: access to the US market is a carrot which comes at the expense of unilateral concessions and higher tariffs, hollowing out WTO’s foundational principles and leaving smaller economies – the most reliant on multilateral rules – particularly vulnerable.
Ideas to Save the WTO
Joost Pauwelyn proposes an interesting idea on how the US reciprocal tariffs could, instead of ending the WTO, save it. He argues that GATT Article XXVIII provides a legal mechanism for countries to renegotiate tariff commitments by offering compensation to substantially affected partners. Although the US has not formally invoked it, its reciprocal tariffs could in principle be multilateralised under GATT Article XXVIII. This mechanism could integrate the bilateral deals into the WTO framework, while also allowing affected states to retaliate without waiting to have authorisation from the WTO’s dispute settlement body. A coordinated, broad-based renegotiation under Article XXVIII could transform unilateral US moves into the largest multilateral tariff negotiation round since the WTO’s creation. Such a round may lead the way for a new balance of global trade relations that has changed in the last 30 years. However, it is uncertain how this approach would address the development and inclusion issues, which are very important priorities for the majority of WTO members.
Some experts suggest that the best option for the WTO would be for the United States to leave the organization, given its consistent disregard for commitments and the unlikelihood of its respecting WTO rules. Legally, Article XV:1 of the WTO Founding Agreement allows any member to withdraw voluntarily with six months’ notice. Alternatively, members could invoke Article 60 of the Vienna Convention on the Law of Treaties (VCLT), a principle of customary international law, treating US conduct as a material breach of the treaty, or rely on Article IX of the WTO Founding Agreement, which permits majority decision-making when consensus fails. While exclusion would be unprecedented and risky, it would restore the organization’s credibility and enable the remaining 85% of global trade to continue under rules-based governance. By removing the US, the remaining members could restore the organization’s functionality, appoint new judges, and foster stronger multilateral cooperation.
The US has paralysed the WTO Appellate Body by blocking the appointment of its members, including, most recently, on 26 September 2025, it singlehandedly vetoed for the 90th time a proposal supported by 130 WTO members to restart the selection process. With this dysfunctional Appellate Body, any losing party can simply appeal to it, which is otherwise called appealing to void. Over 30 cases have already been appealed since the paralysis began in December 2019. This has significantly weakened the enforcement mechanism, eroded trust and made global trade rules unpredictable. Because the US alone is responsible for this deadlock, some argue that its removal would solve this crisis. Such an exit would allow the remaining members to restore a fully functioning Appellate Body and revive a credible rules-based trading system. However, Rob Howse warned that forcing or inviting a US exit would create serious legal and systemic risks. It could push the WTO toward power-based trade relations, undermining the very predictability that a restored Appellate Body is meant to protect.
A more pragmatic strategy is collective counter-leverage. An Alliance for Open Trade, comprising like-minded WTO Members such as the EU, Canada, Mexico, Brazil, and South Korea, is seen as a crucial unified front to counter the US administration’s aggressive unilateralism and tariffs. This coalition, which accounts for over 50% of all US goods exports, possesses significant economic leverage to make the costs of American isolationism prohibitively high, thus aiming to prevent a trade war and sustain the rules-based global trading system.
At the same time, a Small Open Economy Caucus (SOEC) could amplify the voice of vulnerable states that depend most on predictable rules. Using GATT Article XXIII:1(c), the SOEC could bring a “situation complaint” to highlight the systemic uncertainty created by US conduct. Coordinated suspension of concessions, rather than fragmented unilateral retaliation, would preserve collective discipline. Enhanced transparency and intra-caucus support measures could shield weaker members from disproportionate harm.
A Crisis and an Opportunity
For the WTO to remain relevant in the 21st century, it must deliver not only by managing unilateralism but also by serving people and the planet. The WTO stands at a “reform or die” moment. This crisis is a perfect time to reform the WTO. While reform priorities are contested – ranging from tariffs and consensus rules to differentiation among developing countries, dispute settlement, and strengthening special and differential treatment (S&DT) – this article argues that the ongoing crisis presents a historic opportunity to make development a core principle of global trade governance.
Since the GATT’s inception, development has often been treated as an afterthought, largely confined to S&DT waivers and carve-outs. This approach has marginalized development as a temporary deviation from the core international trade rules. The current crisis creates a space to change course on development discourse: to move beyond S&DT and embed development at the heart of the WTO’s mandate. Doing so requires rethinking not only dispute settlement, consensus or tariff bindings, but also how trade rules can be modified and designed to ensure that the gains from trade are widely and fairly shared across and within countries.
With reform discussions gaining momentum in recent days, it is time to explore fresh approaches that embed development at the core of global trade governance. Over 80% of the world’s population lives in developing economies. Their development needs should be placed at the very heart of the WTO reform agenda. Development should be recognised as a global public good and a shared responsibility, moving beyond the commoditization of people towards an inclusive trading system. The reform process should begin with a systematic assessment of how existing trade rules affect development outcomes.
Scholars like Sonia Rolland have long argued that development should stand alongside trade liberalization as a normative co-constituent of the multilateral trading system. Such a reconceptualization could be a game-changer in mainstreaming development in the WTO’s mandate. It is further suggested that a reformed WTO should abandon the outdated “single undertaking” model and embrace flexibility, recognizing that Members at different stages of economic development should not bear identical obligations. A pluralistic approach would allow emerging economies to pursue their own development strategies while they remain committed to the rules-based trading system.
An earlier proposal called for establishing a Council for Trade and Development, replacing the existing Committee on Trade and Development, to embed development more effectively within the WTO’s institutional framework. While creating such a body would entail reforming the structure of the WTO under Article IV of the Marrakesh Agreement, an immediate step could be launching a Work Programme on mainstreaming development as part of the ongoing WTO reform agenda. This Work Programme could be a forum for developing concrete modalities for integrating development into existing and future trade agreements.
Such changes would reflect the lived realities of WTO members, the majority of whom are developing or small economies. For them, trade rules directly determine whether they can industrialize, participate in global supply chains, or transition to low-carbon economies. By making development a core principle, the WTO can restore legitimacy and purpose, ensuring that global trade is not only open but also fair and inclusive.
The Road Ahead
The next major milestone is the WTO’s Fourteenth Ministerial Conference (MC14) in March 2026. Meanwhile, an informal high-level meeting at ministerial or senior official level should be convened in the coming weeks. Its purpose would be to acknowledge the crisis, articulate a unified stance, draft an inclusive and representative outline for WTO reform, and set a three-month timeline for action ahead of MC14.
This interim forum should focus on two areas: developing a WTO-consistent collective response to US tariffs and bilateral deals, and drafting a reform agenda to be presented at MC14. Such a reform agenda cannot be set solely by major economies. For any consensus to be durable, it must incorporate the voices and priorities of the broader WTO membership. Small businesses and women, who are often left behind in global trade, must also be included in the conversation if legitimacy is to be regained.
The question is not simply whether the WTO can survive, but whether its members are willing to make it worth saving. Maintaining the status quo won’t suffice. If members step up, this disruption can become an opportunity to create a more inclusive, development-focused system, one that guards against coercion, emphasizes sustainability, and ensures that trade serves all, not just the most powerful.
*Saleh is an international trade and development lawyer. He formerly worked with the World Trade Organization (WTO) as a Legal Officer.