Trump’s unilateral imposition of reciprocal tariffs on scores of countries poses impending threat to the future of the rule-based multilateral global trading system under the WTO. What options do the WTO members have to salvage the organization? (2025, 15 Marks)
The WTO rests on one conversion: trade conflicts once settled by who could hurt whom became arguments about what a treaty means. The 2025 “reciprocal” tariffs reverse that conversion and come from the member that designed the system. Salvage means keeping the rules alive while the hegemon stands aside.
Why the threat is systemic
- MFN breached at scale: country-specific rates of roughly 10–41% under the International Emergency Economic Powers Act, plus an extra 25% on India from 27 August 2025, discriminate openly between partners, contrary to GATT Article I. The WTO estimated in September 2025 that the share of world trade on MFN terms had fallen from about 80% to 72%.
- The principle itself attacked: the USTR’s message to MC14 (March 2026) argued that MFN in its current form fails to deliver reciprocity, recasting reciprocity as bilateral managed trade.
- No referee: Washington has blocked Appellate Body appointments since 2017, though DSU Article 23 bans such unilateral judgement.
- Durability: after Learning Resources v. Trump (20 February 2026) struck down the IEEPA tariffs, Section 122 and then Section 301 duties replaced them, and the average tariff barely moved.
Options before the members
- Hold the floor, not the spiral. Bound tariffs, MFN among the other 165 members and trade policy reviews still operate; complaints by China and Canada (early 2025) and Brazil (August 2025) record breaches without escalation.
- Keep adjudication alive. Widen the Multi-Party Interim Appeal Arbitration Arrangement (DSU Article 25), now around sixty members and some 60% of world trade; India’s absence weakens it.
- Plurilateral rule-making. The e-commerce agreement (66 members) and Investment Facilitation for Development let the willing move. At MC14 India alone blocked bringing IFD into the WTO (165 of 166 backed it), arguing that investment is not a trade issue; the price of plurilateralism is a two-tier WTO.
- Coalitions of the rule-abiding. The Future of Investment and Trade Partnership, launched by fourteen small open economies on 16 September 2025 (nineteen by July 2026), shows middle powers as custodians; the EU, Japan, Brazil and India could anchor a wider group.
- Reform that makes American return rational. Meet fair grievances (Appellate Body overreach, industrial subsidies, state enterprises, self-designated developing status) without restoring a loser’s veto.
- Development credibility. A permanent public-stockholding solution and a second fisheries deal before the agreement’s September 2029 sunset would show the South that the WTO still delivers.
The theoretical lens
Charles P. Kindleberger’s hegemonic stability logic (The World in Depression, 1973) predicts decay when the hegemon defects. Robert O. Keohane’s After Hegemony (1984) counters that regimes outlive their founder because lower transaction costs and shared information stay valuable to the rest. India’s interim deal with Washington (February 2026) and its FTA push (UK CETA in force July 2026) are hedging, not exit.
Conclusion
Members cannot force Washington back but can make its absence survivable: hold MFN, widen the MPIA, legislate plurilaterally and keep reform open for American return. India, which gains most from rules and least from leverage, should join the MPIA rather than stand outside both courts.