**Introduction** Reform of the World Trade Organization (WTO) is necessary because the organization’s rules, enforcement mechanisms, and governance structures no longer correspond to how trade policy is being used. Governments increasingly deploy tariffs, subsidies, export controls, and regulatory measures to pursue industrial, technological, and security objectives, while the WTO remains anchored in a framework designed primarily for tariff liberalization and market-based competition. This disconnect has weakened compliance with the multilateral trading system and encouraged a shift toward unilateral and power-based approaches to trade management. **Contextual background** Since the late 2010s, trade policy has become more interventionist and strategically oriented. Governments have expanded the use of industrial subsidies, imposed new tariffs and export restrictions, and justified trade measures on grounds of resilience, security, and strategic autonomy. These shifts accelerated following supply chain disruptions, geopolitical tensions, and intensifying competition in technology- and resource-intensive sectors. At the same time, multilateral disciplines have weakened. WTO monitoring shows a sustained rise in trade-restrictive measures since 2020, while dispute settlement and rulemaking have stalled. As a result, the gap between WTO commitments and applied trade policy has widened[1][2]. **Reasons why WTO reform is necessary** **1.** **WTO disciplines lag behind the expansion of industrial policy and non-tariff trade distortions** Industrial policy has become a central feature of trade policy across advanced and emerging economies. Governments increasingly rely on subsidies, tax incentives, preferential financing, and local content requirements to shape domestic production in sectors such as clean energy, advanced manufacturing, and technology-intensive industries. Many of these measures distort trade but remain weakly disciplined under existing WTO rules. Subsidy disciplines rely heavily on transparency and notification, yet compliance with notification requirements is uneven. Local content requirements embedded in industrial and environmental policies continue to proliferate, favoring domestic inputs and fragmenting markets without consistent multilateral scrutiny[3]. The absence of updated rules or effective enforcement mechanisms has contributed to competitive subsidy escalation and increased pressure on smaller economies that lack the fiscal capacity to respond in kind. **2.** **The erosion of dispute settlement has reduced the enforceability of WTO rules** The absence of a fully functioning dispute settlement system has weakened compliance incentives. In the absence of an operational Appellate Body, panel findings do not lead to binding outcomes, allowing potentially WTO-inconsistent measures to remain in place. WTO monitoring reports show a sustained increase in new tariffs and other import-restrictive measures, alongside weakened dispute settlement[1][2]. In this environment, members have fewer avenues to secure binding resolution of contested measures, particularly those with limited capacity to pursue retaliation. This has reduced the effectiveness of adjudication as a tool for enforcing WTO commitments. **3.** **Consensus-based governance has limited the WTO’s ability to respond to emerging challenges** Decision-making by consensus has constrained the WTO’s ability to update rules or respond to new trade challenges. Members have struggled to reach agreement on reforms related to industrial subsidies, digital trade, and the treatment of security-motivated trade measures. Efforts to develop multilateral rules on digital trade have stalled, leading a subset of members to pursue Joint Statement Initiatives on e-commerce outside the core WTO negotiating framework[4][5]. Disagreements have also persisted over how existing rules apply to trade measures justified on national security or resilience grounds. The WTO lacks effective mechanisms to integrate flexible, plurilateral outcomes into the multilateral system, increasing the likelihood that new trade rules are negotiated outside the organization altogether[6]. This has reduced coherence across trade regimes and weakened the WTO’s central role in global trade governance. **Conclusion** WTO reform is necessary to restore the organization’s relevance in a trade system shaped by industrial policy, strategic competition, and geopolitical fragmentation. Persistent gaps in subsidy disciplines, weakened dispute settlement, and rigid governance structures have reduced the effectiveness of multilateral trade rules. Without reform, the WTO risks continued erosion as governments rely increasingly on unilateral measures and selective arrangements to manage trade relations.
