Bota Posted on 2025-06-27 11:08:00

"WTO, paralyzed for years" - EU proposes creation of a new trade organization

From Kristi Ceta

"WTO, paralyzed for years" - EU proposes creation of a new trade

At the EU summit in Brussels, European leaders discussed the possibility of reforming the institutional framework of the World Trade Organization, including its stalled dispute settlement mechanisms, to better reflect the current global trade landscape.

"The WTO has not worked for years," German Chancellor Friedrich Merz said at a press conference after the summit, referring to its continued dysfunction under the Trump and Biden administrations.

Commission President Ursula von der Leyen presented leaders with various options for trade agreements, labeling as most attractive a closer cooperation between the EU and members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a regional trade pact of 11 Pacific countries and the United Kingdom.

She presented the initiative as a possible first step towards reshaping the global trading order. "We can think of this as the start of reforming the WTO, of course, by understanding what needs to be changed positively within it," von der Leyen said.

The Head of the Commission stressed the importance of learning from the shortcomings of the WTO, to show the world that "rules-based free trade" remains achievable with a broad group of willing partners.

"This is a project that we really need to get involved in," she said, adding that the EU should take the lead in managing this initiative. Asked whether the United States should be involved, von der Leyen replied: "As far as I understand, the Americans left the Comprehensive and Progressive Agreement for Trans-Pacific Partnership at a certain point."

This is not the first attempt to circumvent the WTO’s paralysis. 57 of its members, including the United Kingdom, Paraguay and Malaysia, have joined the Interim Multilateral Appellate Arbitration Arrangement (MPIA), a mechanism that performs the functions of the WTO’s Appellate Body for participating members. However, the new mechanism covers only 57.6% of global trade and does not address the broader institutional crisis.

The WTO has been virtually paralyzed since December 2019, when the United States began blocking appointments to the Appellate Body, rendering the system dysfunctional.

Major trade negotiations, such as those on eliminating harmful fisheries subsidies and reforming agricultural rules, remain blocked due to rigid positions from key members, including the US, China, Japan and the EU itself.

Shqipëria 2025-06-27 Edel Strazimiri

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