The World Trade Organization – Crisis and Reform

For decades, the World Trade Organization (WTO) has been the central forum for negotiation and decision-making on global trade issues. Rising economic nationalism, protectionism, and shifting global power dynamics mean that the WTO must adapt. Four points are particularly important for the Bavarian economy:

Peaceful dispute resolution instead of trade wars

The WTO’s dispute settlement mechanism must be redesigned to aim for a solution accepted by all conflict parties. While the reform of the procedure is being pursued, the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) should be utilized. It defuses conflicts and strengthens the rules-based international order.

Fair competition through clear rules

Trade-distorting effects of industrial subsidies must be prevented. To this end, stricter monitoring provisions must be enshrined in the WTO Agreement on Subsidies. We would welcome the expansion of the list of prohibited subsidies, the reversal of the burden of proof, incentives for the notification of subsidies, and restrictions on financial assistance provided by state-owned enterprises.

Most-Favored-Nation Principle for fair trade

The WTO must adhere to the most-favored-nation principle. Where necessary, existing options can be utilized to enable a differentiated tariff policy and stable framework conditions. If WTO members deviate from the most-favored-nation principle, they must conclude WTO-compliant free trade agreements as soon as possible.

Shaping trade policy while pursuing a reform agenda

The WTO must continue its work on trade policy and demonstrate that WTO membership is beneficial for WTO members while reforms are being pursued. For example, in regulating digital trade, the WTO could avert significant burdens on the economy and promote global economic growth. By addressing carbon pricing mechanisms, it could contribute to efficient climate policy.

The positionpaper is available for download in German. Please follow the link to the German version of this website.