Trump's proposed reforms of the WTO: Some good, some not

The United States is back at the World Trade Organization (WTO), well-represented with an experienced trade lawyer ambassador, Joseph Barloon, in place. It has paid the back dues that remained when President Joseph R. Biden Jr. left office—a positive and unanticipated development, as President Donald Trump is on record as having no love of the organization. And in a little-noticed communication, the United States also tabled a paper on December 15 giving its views on WTO reform.

US participation in a reform effort is bound to be complicated. The most obvious complications stem from the Trump tariffs and bilateral agreements. The tariffs violate the two most basic commitments of WTO members—living up to committed (bound) tariff levels and applying tariffs equally to all members, neither of which the United States currently does. Added to this are the Trump trade deals, in which various countries have been pressured to give the US preferential treatment, likely a violation of their own WTO obligations. The US pressure has often required increased investment by the other party for production in the United States, which may come at the expense of investment elsewhere. While not necessarily a violation of the rules, investment is a precursor for creating the goods and services that are later traded. Market forces are no longer clearly shaping this part of world trade.

What changes at the WTO does the United States want? Some of the US proposals make sense, but some are ill-advised.

Sensible Proposals First

The first proposal from the United States would end the nonparticipant veto over new WTO agreements. For years, a major drawback of the WTO has been that it cannot add new agreements to the body of trade commitments it administers if any member objects, even if the member blocking consensus (taken as unanimity) would not be adversely affected by the WTO doing so. Solving this problem is central to the future of the organization. The United States adding its prodigious weight, which it has not been shy in wielding, to crafting a solution should be welcomed by all but the most recalcitrant one or two members.

There are two ways to accomplish the goal: Either the participating members would overcome objections through argument and diplomacy to incorporate the new agreement  in the body of officially recognized WTO agreements, or participating nations could resort to pragmatism—the agreement’s participants simply begin meeting at the WTO, supported by the WTO Secretariat, and acknowledge the new arrangement on an interim basis. (Example: Adopt the Investment Facilitation for Development Agreement completed in 2023, ad interim.) The WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), could and did  take a pragmatic approach, as it existed as an organization without legal sanction for nearly 50 years.

The second positive US proposal would limit special and differential treatment to the neediest countries. The United States is correct that it is insupportable to allow any country, regardless of size or productive capacity, to declare that it should be released from its obligations because it designates itself as a developing country. This is not much of a practical problem. China declared it would no longer claim the right to special differential benefits and being excused from certain trade obligations. But this move came only this September, 15 years or more too late, and its prior claim long proved irksome to many members of the WTO, although not particularly damaging to the trade of others.

Third, the United States wants to assure transparency. Washington is again correct that the WTO functions well only if members know what other members are doing in the way of restricting or otherwise distorting trade, such as by granting subsidies. The United States appears to discard the best means to achieving its objective, however, which would be commissioning the WTO Secretariat to ferret out and report trade-distorting measures when members imposing the measure fail to disclose them. Of course, counter-notifications can also provide a source of information, but in the world of artificial intelligence (AI) research tools, near absolute transparency should be ultimately achievable, as large language models move toward omniscience. Give the Secretariat ChatGPT or the equivalent, a mandate to investigate, and free rein to publish the results.

So far, so good. Now for the problems.

First, the administration wants to discard the “most favored nation” (MFN) principle, which requires a country to grant the lowest tariff offered to its “most favored” trading partner to all others with MFN status. President Franklin Roosevelt and his secretary of state, Cordell Hull, set great store by nondiscrimination, seeing it as a foundation for world peace. But the Trump administration identifies MFN as leading to free riding for those not providing reciprocity to the United States, getting the benefit of deals that others are paying to achieve the benefits of. The complaint is valid; the solution proposed by the Trump administration is not.

Over time economies change, especially relative to each other (for example, that of China versus all others). The feeling among many trading nations is that growing economies no longer provide full reciprocity, hence a putative reason for the Trump “reciprocal tariffs.” The problem lies not in the principle of providing nondiscriminatory treatment but in failing to reassess whether reciprocity is being maintained as other countries' economies grow. The assumptions upon which deals were cut during the GATT era, later at the beginning of the WTO in the 1990s, or more recently, may need to be revisited. But getting rid of MFN would not address the problem. Instead, it would cause chaos. Every time two members strike any deal, if the benefits remain strictly between the two of them, the nonparticipants could justifiably feel aggrieved. It is inconceivable that the United States would stand idly by as some other member receives better treatment than what it negotiated.

MFN may be, like Churchill said of democracy, the worst form of governance, but for all the others that have been tried from time to time.

There are other problems for which the United States provides the wrong solution.

The administration, for example, favors letting each WTO member define for itself its essential security interests justifying tariffs or other trade barriers. The problem is not with the principle but with its application. Sweden many years ago declared that making boots for its army domestically was necessary for national defense, and import restrictions were therefore justifiable. The remedy for this gaffe was universal derision. But derision simply may not work for reining in US excesses, such as the administration’s invoking national security as an excuse for restricting imports of kitchen cabinets and bathroom vanities. (How could this even have been proposed?)

Another Trump administration suggestion is to constrain the WTO Secretariat by keeping it from addressing substantive problems. Muzzling the experts that the nations of the world have gathered to serve them at the WTO is not wise. It is also not necessary, since the members control outcomes. Contrary to the US concerns, the Secretariat should certainly seek to “influence the agenda,” advocate “outcomes at the negotiating table,” and enhance its “monitoring and commenting on member’s trade related measures.” Contrary to what the United States says, the Secretariat, the WTO’s professional staff, should be relatively free to envision “itself as a trade research unit undertaking projects that have not been [specifically] authorized by Members.” The United States has demonstrated during 2025 that it has no reason to fear the independent views of experts in the Secretariat but rather should  value their input.

Finally, the US paper states that a number of the most serious problems for world trade are beyond the WTO’s capabilities, including the problems of imbalances, overcapacity, overconcentration of production, and supply chain resilience. These are subjects that concern many members. Perhaps the organization will not be able to make much progress toward solutions, but the United States would do better to demand that its own chief concerns for the trading system, which others may share, be addressed directly in WTO deliberations, as opposed to being handed to some other forum for consideration or resorting solely to unilateral measures as a response. The United States was instrumental in creating the world trading system. Washington should not avoid dealing with the most difficult problems affecting world trade at the WTO but undertake the hard work of finding solutions through the system it created.