The WTO at a Crossroads: Why Global Trade Rules Still Matter

The WTO now counts 166 members, covering roughly 98 percent of global trade. Data suggests this integration has been transformative: membership increased trade between participants by 140 percent, while fostering a 4.5 percent rise in GDP per member. For developing economies, the results were even more profound, with real income per person nearly tripling between 1995 and 2023. These rules provided the predictability necessary for global value chains to flourish, growing from 35 percent of trade in 1995 to 49 percent by 2022.

Despite these gains, the system faces four critical pressures. First, the balance of economic power has shifted; low- and middle-income countries now account for 45 percent of global trade, up from 23 percent three decades ago. Second, government intervention has surged, with discussions on industrial policy increasing tenfold since the late 1990s. Third, the digital economy—specifically services and AI governance—has outpaced current rulebooks. Finally, security concerns are triggering a cycle of protectionism that threatens to fragment the global market.

Simulations for 2050 illustrate the stakes. A scenario marked by robust cooperation could boost global GDP by 2.9 percent, whereas a world fractured by geopolitical lines could see GDP dip 5.1 percent below baseline projections. If cooperation erodes entirely in favor of fragmented, preferential agreements, that loss could deepen to 6.9 percent. For smaller economies, which lack the bargaining power of major powers, the cost of this erosion is disproportionately high. The path forward demands an update to these rules, ensuring they remain relevant to the realities of a modern, interconnected economy.