EU and Germany push for a new World Trade Organization
3842 Mins Read
A proposal, introduced by European Commission President Ursula von der Leyen and German Chancellor Friedrich Merz, has sparked considerable attention.
Speaking at the end of a summit of EU leaders in Brussels on June 27, they floated the idea of the EU taking the lead in forming an alternative to the World Trade Organization (WTO), the world trade body that has been in place since 1995.
Merz said the idea was in its early stages but could include mechanisms to resolve disputes, as the WTO was meant to do.
“You all know that the WTO doesn’t work anymore,” he said, adding that a “new kind of trade organization” could gradually replace “what we no longer have with the WTO.”
The German chancellor was referring to the near-total breakdown of the WTO’s dispute resolution mechanism.
It was former US President Barack Obama who first blocked appointments to the WTO’s Appellate Body — its top court for trade disputes — during his later years in office.
That blockade has continued under every US administration since, regardless of party affiliation, as successive governments have opposed WTO rulings that they argue undermine US national interests.
As a result, trade disputes can no longer be conclusively resolved once a party appeals. Currently, unresolved cases include disputes between the EU and Indonesia over nickel ore exports, rulings on subsidies for aircraft manufacturers Boeing and Airbus, and anti-dumping cases against China.
The EU’s von der Leyen emphasized plans for a particularly close partnership with like-minded trade nations in Asia, referencing potential cooperation with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
This trade alliance currently includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The United Kingdom has also joined, becoming the first European country in the bloc.
