What should all the other trading countries do? What happens now is largely in their hands.

The shock and awe delivered by President Donald Trump’s multiple announcements of trade measures and trade plans has produced paralysis at home and abroad. Reactions are greatly complicated by lack of clarity about the full meaning of his statements about security arrangements, possible outcomes of conflicts in Ukraine and Gaza, and the future of NATO, all mixed in with his trade plans. There is as yet no unified response by America’s trading partners. Confusion among them has been purposely induced.

America’s trading partners, operating independently, are testing whether any ad hoc bilateral solutions can be found in direct dealings with the US, while they consider how to gain additional economic security through making alternative trade arrangements or by become more self-sufficient. Retaliatory tariffs in response have not yet been tried, outside of some imposed by China. A hedging of bets is taking place. The future for each country’s bilateral relations with the US remains uncertain. There has been no coherent response.

These are not conditions that will foster global trade. However, the US accounts for only 9 percent of world exports of goods. So it is worth taking a moment to consider what the rest of the world should do.

The question of what sort of global order there should be for trade remains unaddressed. Over $80 billion worth of trade in goods and services takes place daily under the World Trade Organization’s (WTO) rules. The trading system the US was instrumental in putting into place 80 years ago is based on these principles: (1) The openness of markets is assured, with tariffs contractually bound with maximum levels. (2) Trade is to be nondiscriminatory, at bound tariff levels (although lower or zero tariffs are permissible in regional and bilateral free trade agreements). (3) Other forms of trade restrictions are banned unless required by “essential security” concerns. (4) Export subsidies are banned, and injurious subsidies can be offset. (5) Peer review is provided. (6) Trade measures are to be reported; they are to be transparent. The founding of the WTO brought in addition (7) binding dispute settlement.

Have these central elements of that global system been nullified by recent American actions?

President Trump has not announced a view on how the world trading system should be structured. Project 2025, the political initiative to reshape the US government, was contradictory on this point. US strategy is based on intentional unpredictability, which may be seen abroad as capriciousness. Neither the range of the president’s stated objectives for the imposition of higher tariffs nor his actions offer dependable guidance. What the current and threatened US trade measures make crystal clear is that the US does not consider itself bound by fundamental WTO rules. Tariffs at will is the opposite of tariffs contractually bound.

While Trump has from time to time spoken out against the US trade deficit and the countries he sees as the perpetrators, the surplus countries, he has not endorsed the US bilateral trade balance as the determinative driver for the imposition of US tariffs. To the contrary, his tariffs are threatened or used to shore up domestic production, to entice foreign investment for that purpose, to eliminate adverse tariff disparities, to address differing approaches to taxation, to press for ending wars or for prosecuting them, to halt the flow of fentanyl and migrants into the country, to foster territorial expansion, to force the use of the dollar as a principle medium of exchange, as well as to reduce or eliminate trade deficits. The common thread is that US tariffs are to provide leverage, and America is presented as the aggrieved party. The objectives are varied and variable.

What can be accomplished through the WTO now? A New Code of Conduct

Representatives of a critical mass of WTO members should meet as soon as possible this year and adopt a World Trading System (WTS) Code of Conduct 2025, with as high a rate of participation as feasible. (The US can join at some future time, when it can agree to meet the Code’s requirements.)

The Code would provide that signatories agree to:

• Act in a manner that to the extent possible maintains the current rules-based world trading system administered by the WTO. The WTO is still highly relevant to the economic well-being of all trading nations.
• Strengthen the rules-based multilateral trading system through open plurilateral agreements among coalitions of the willing.
• End the nonparticipant veto. At the WTO, trade agreements should be fast-tracked. Multilateral and plurilateral agreements serving the trading system are to be encouraged. If a critical mass of WTO members (enough to make an agreement workable) reach agreement, and it serves the purposes of the WTO, the agreement shall be recognized as legitimate by all members and will be administered at the WTO. Nonparticipants will not be bound by the agreement, but neither can they block its adoption.
• Seek to avoid any bilateral trading arrangement or unilateral action having a substantial adverse effect on any other member’s economy. A new golden rule. Adherents shall avoid granting differential market access (outside of broad free trade agreements) and discriminatory access to supplies.
• In any re-routing of trade flows, minimize injury to other economies. To be successful in this regard, increased domestic demand must be used to offset disruptive productive capacity.
• Abide by binding dispute settlement, such as through the Multi-Party Interim Arrangement (MPIA) at present, although additional reforms must be forthcoming.
• Recognize that the WTO director-general, as WTO CEO, shall participate in formulating the WTO’s agenda and is urged to propose negotiating solutions.
• Organize themselves to foster WTO decision-making. The work of the WTO is to largely take place in smaller groupings, consisting of leading members and a few additional members serving as representatives of others (a format used in international financial organizations). Negotiation cannot readily be accomplished in committees of the whole.
• Promptly turn to deliberation on existential questions: climate change, food security, dealing with pandemics, the use of AI, and the rules for digital commerce generally.
• Make the WTO into a true knowledge hub for all trade policy questions, not through duplication of existing resources and expertise but drawing on these sources.
• Strengthen peer review by increasing the WTO’s intelligence gathering and forensic analysis capabilities, to give WTO members completely independent, enhanced assessments of every member’s participation in trade, for the information of the membership and those engaged in trade.
• Deploy AI and digital tools to carry out these enhanced responsibilities.
• Invest in strategic foresight capability in this time of heightened uncertainty to enable the WTO Secretariat to identify and meet the trade aspects of the challenges of the future. (The plan for accomplishing this could be drawn up by Maroš Šefčovič, EU commissioner for trade and economic security, who until recently had the strategic foresight responsibility for the EU Commission.)
• The WTO should offer a broad range of in-house support to major regional preferential trade agreements (RTAs), including the African Continental Free Trade Agreement (AfCFTA), the Association of Southeast Asian Nations (ASEAN), the Gulf Cooperation Council, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and potentially others. The definition of “world trade organization” already incorporates a place for regional trade agreements under the rules, but the WTO and the RTAs do not presently work actively together to foster coherence.
• Provide the WTO with sufficient independent financial resources to achieve these objectives, with contributions based on members’ shares of trade flows of goods and services. Having an independent source of income is the only way to assure the necessary upgrades in essential member services.

Conclusion

The world trading system is in a period of disruption. Commercial conflicts will have costs, directly and through lost opportunities. But perhaps this generation of the rest of the world’s trade officials, stimulated by US trade policy, can think through how to achieve an enhanced degree of cooperation with their country’s trading partners. For the global trading system, the modest steps outlined above could assist in getting through this period, minimizing harm and making some progress.

A concerted effort could render the negative judgment contained in a recent headline in the New York Times, “The W.T.O. Is Toast,” as thoroughly mistaken.