CUTS Daily Bulletin # 02 | September 16, 2026
What is the Role of the WTO?
 
The World Trade Organisation (WTO) stands at a critical juncture. Created in 1995 to provide the institutional foundations for a rules-based global trading system, the WTO has played a significant role in reducing trade barriers, administering agreements, facilitating negotiations and providing a forum for resolving disputes. Yet the economic and geopolitical environment for which it was designed has changed profoundly. The rise of new economic powers, geopolitical rivalry, economic-security concerns, industrial policy, fragmented supply chains, digital trade and artificial intelligence are testing both the relevance of the WTO’s existing rules and its ability to deliver new ones. The central question emerging from the discussion is therefore not whether the WTO still has a role, but what that role should be in a fundamentally different global economy.

The panel revealed important differences in emphasis, but also a striking degree of common ground. From the US perspective, the WTO should be judged less by institutional orthodoxy than by whether it produces tangible trade outcomes. The US argued that the experience of recent decades demonstrates the limits of relying on the WTO as the sole mechanism for developing new, comprehensive rules applicable to all members. Persistent trade imbalances, deindustrialisation and strategic dependencies have raised questions about whether the existing system adequately serves national economic interests. The WTO should therefore coexist with bilateral, plurilateral and other multilateral approaches rather than being treated as the only available instrument.

At the same time, the discussion emphasised that the WTO's most valuable work may lie in functions that attract considerably less political attention. Its committees, transparency mechanisms and monitoring of existing agreements provide a practical infrastructure for identifying and addressing trade irritants before they become major disputes. Better notifications, transparency and implementation of existing commitments could therefore constitute an important part of the WTO's future. The US perspective also stressed stronger engagement with the private sector and a more focused Secretariat, arguing that the organisation should remain fundamentally member-driven and concentrate on administering agreements and supporting members rather than expanding its own policy agenda.

The European Union (EU) offered a somewhat different conception of the future. It argued that the WTO should continue to anchor the multilateral trading system, retaining its core functions of administering agreements, negotiating rules, monitoring trade policies and providing dispute settlement. But anchoring the system does not mean preserving the institutional status quo. The EU sees a need for comprehensive reform in response to changes in the distribution of economic power, geopolitical tensions, critical dependencies and the growing use of industrial policy. In particular, existing rules concerning subsidies, state-owned enterprises and the level playing field may no longer adequately address today's competitive environment.

One of the most consequential debates concerned the WTO's foundational principles—particularly most-favoured-nation (MFN) treatment and consensus-based decision-making. India's argued that these principles remain vital because they help shield smaller and developing economies from the disproportionate influence of economic power. Consensus provides legitimacy and inclusiveness, while MFN remains a core safeguard against discrimination. From this perspective, the WTO's negotiating difficulties are not fundamentally the product of consensus itself, but of weakened trust, unfulfilled development commitments and insufficient progress on issues important to developing countries. Reform, should therefore, rebuild trust and deliver on the organisation's development mandate rather than dilute its foundations.

The EU, while equally recognising the importance of MFN and consensus, argued that the principles need to be examined in light of contemporary realities. Consensus cannot become synonymous with paralysis, particularly when a single member can prevent agreement among a very large majority. Similarly, MFN has always contained exceptions, and the question is whether those exceptions and the broader application of the principle remain appropriate in an era increasingly shaped by economic security and concerns about critical dependencies. The resulting debate is, therefore, less about abandoning foundational principles than about determining how they can function effectively in a changed global economy.

The development dimension added another crucial layer. India emphasised that WTO reform must preserve policy space for industrialisation, value addition, food security, livelihoods and structural transformation. For developing countries, trade is not simply about market access; it is also about creating the conditions under which economies can diversify and move beyond dependence on raw-material exports. Uniform obligations applied to economies at very different levels of development do not necessarily produce equitable outcomes. Consequently, the unfinished development agenda, including issues affecting developing countries and LDCs, must remain central to reform.

Digital trade provided perhaps the clearest illustration of both the WTO's potential and its limitations. The private-sector perspective highlighted how rapidly technology is transforming global commerce. Semiconductor production, AI, cloud computing, digital services and cross-border data flows depend on highly integrated international supply chains, yet many WTO rules predate these developments. The inability of members to reach a permanent solution on customs duties for electronic transmissions illustrates the difficulty of adapting multilateral rules to technological change.

At the same time, the discussion demonstrated the potential of plurilateralism: where consensus among all members proves difficult, groups of willing members can develop rules that address emerging issues while remaining anchored in the WTO.

This raises an important question about the future architecture of the trading system. Plurilateral agreements may provide a pragmatic route forward, but India cautioned that they should not fragment the WTO or create a two-tier system detached from the broader membership. A framework is needed to determine how such agreements can be incorporated into the organisation while preserving inclusiveness, transparency and the interests of developing countries. The challenge is, therefore, to reconcile flexibility with coherence — allowing willing members to move ahead without turning the WTO into a collection of disconnected trading arrangements.

The final message of the discussion was consequently pragmatic rather than revolutionary. WTO reform is unlikely to emerge from a single grand bargain. The more realistic path is gradual: improve transparency and notifications, strengthen committee work, restore effective dispute settlement, deepen private-sector engagement and identify areas where members can generate concrete results. In parallel, more difficult questions —  including consensus, MFN, the role of the Secretariat, development and the place of plurilateral agreements — require sustained political discussion. The immediate objective should be to demonstrate that the organisation can still produce meaningful outcomes, thereby rebuilding confidence in multilateral cooperation.

Perhaps the most important insight from the panel is that WTO reform is ultimately a question of institutional adaptation rather than institutional survival. The organisation remains valuable because governments and businesses continue to need transparency, predictability, common rules and a forum in which trade frictions can be managed. But relevance cannot be assumed. A WTO designed for the world of 1995 cannot simply administer yesterday's rules while tomorrow's economy is being shaped elsewhere. Its future credibility will depend on whether it can combine the legitimacy of multilateralism with the flexibility demanded by technological change, geopolitical competition and increasingly diverse development realities.

As the moderator concluded, the emerging vision is of a WTO that is more accountable to its members and stakeholders, more adaptable, more transparent, capable of flexible forms of cooperation where appropriate, and ultimately more focused on the practical needs of those who depend on the trading system.

Speakers
Maureen Hinman, Co-Founder and Executive Chair, Silverado Policy Accelerator
Amb. Joseph Barloon, Deputy United States Trade Representative (USTR) and Chief of Mission to the WTO, US Government
Dereck Chapman, Director of Trade Policy, Micron
Amb. Maria Martin-Prat, Permanent Representative to the EU to the WTO, EU Government
Amb. Dr. Senthil Pandian C., Ambassador and Permanent Representative of India to the WTO
Digital Regulation for Services Trade: Myths and Hard Truths
 
This session, organised by the World Bank, brought together economists and trade officials to examine how digital trade regulation shapes services trade, drawing on the Digital Trade Regulatory Readiness (DTRR) database and country case studies like Kenya.
  1. Regulation as Both Enabler and Barrier: Digitally-enabled trade was framed as a development opportunity, supporting growth through global platforms and AI-enabled services. The key question raised was not whether regulation matters, but how different types of regulation affect different segments of digital trade.
  2. The Data Measurement Gap: Unlike goods trade, digital services trade lacks visibility at the border, making it difficult to keep track. Two modeling approaches were discussed: computable general equilibrium (CGE) simulation and econometric analysis, with the latter seen as more promising but constrained by limited data. The DTRR database was presented as a tool for benchmarking a country's regulatory readiness against regional and economic peers.
  3. Evidence on Enabling vs. Restrictive Regulation: Enabling regulations were associated with higher digitally-delivered services trade on both the import and export side, while restrictive regulations were shown to affect imports more significantly. Congo's digitalising mining sector was cited as an example of import-led comparative advantage, while Tanzania's growth in content creation and IP licensing was cited as export-driven.
  4. Kenya: Data Localisation and the Balance Question: Kenya was highlighted for strong growth in both imports and exports of digitally-delivered services, supported by a relatively well-developed regulatory system. Data localisation was discussed as a constitutional matter tied to the right to privacy, creating tension with businesses' need for cross-border data flow. It was noted that legal and constitutional clarity reduces investor concerns about data expropriation, with the central challenge being how to enable business activity while protecting public interest.
  5. Trust as the Underlying Currency: Data localisation was described as offering only a "false sense of security," with trust — rather than control — identified as the true enabler of digital trade. Two myths were addressed directly: that restricting data flow is necessary to protect domestic interests (challenged by evidence favoring enabling regulation), and that signing a digital trade agreement automatically leads to digital trade growth (challenged by the view that implementation, administration, and enforcement matter more than the agreement itself). It was also stressed that digital trade growth is not an end in itself, but a means to job creation and closing skills-job mismatches.
  6. Practical Takeaways for SMEs and Policymakers: For small businesses, success was tied to underlying infrastructure (legal compliance, standards, aggregation platforms), mobile-based financing tools, and clarity on shipping and taxation costs. For policymakers, priority reforms cited included legal recognition of e-signatures, explicit cross-border data frameworks, and infrastructure investment — Kenya's approach of linking airport infrastructure to e-commerce hubs was cited as an example. Trust and implementation capacity were emphasised as being as important as the underlying digital trade rules themselves.
Speakers
Katie Francis, Counsellor, Australian Mission to the WTO
Christine McDaniel, Senior Economist, World Bank
Martín Molinuevo, Senior Counsel, Digital Trade Global Lead, World Bank
Alfred Ombudo K'Ombudo, Senior Advisor to the President, Trade Policy, Government of Kenya
Penny Naas, Head of Brussels Office and SVP at German Marshall Fund
What's Next for Plurilaterals? Updating Rules, Paths Ahead
 
This session, organised by the International Chamber of Commerce (ICC), examined where the next generation of trade rules — including for services, digital, and AI-enabled trade — should take shape: within the WTO, alongside it through plurilaterals, or through other configurations such as EU-Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) cooperation.
  1. Lessons for the Next Generation of Plurilaterals: A new rules agenda was said to require political will over sentiment — moving forward among willing members rather than waiting for full consensus — grounded in real-world business needs and a critical mass of interested members. Early, structured discussions were seen as valuable for testing assumptions and narrowing focus toward practical, achievable outcomes. The relaunch of the Trade in Services Agreement (TSA) was raised as one avenue worth reexamining.
  2. Breadth, Content and Certainty: When considering if all or a subset of members need to agree, these 3 aspects were considered. Certainty in trade rules was described as directly translating into time and money saved for businesses, with broader participation reducing fragmentation, and was flagged as most important. Most small businesses were said not to think about the WTO in the daily as long as underlying frameworks (e.g. TBT, SPS, informal MSME working groups) function — but plurilaterals were framed as a practical way to reduce fragmentation and ease trade for MSMEs specifically.
  3. Going Beyond the WTO: Panelists discussed plurilateral limitations — including unresolved governance questions and the shallower commitments possible across large, heterogeneous WTO memberships. Deeper commitments on issues like data flow adequacy, interoperable payment systems, and AI governance were seen as better suited to smaller groupings, such as the EU cooperation with CPTPP countries and other FTA partners — representing around 39 countries and a quarter of the WTO membership. Consolidating overlapping bilateral agreements into a coherent structure was proposed as a possible next step, with the option for a subset of countries to move first without forcing the full WTO membership to follow.
  4. Inclusivity Concerns — South African Perspectives: South Africa's historical opposition to plurilaterals was discussed in the context of concerns that such agreements could deepen existing asymmetries between developed and developing countries, a position reflected in a February 2026 African Union stance. Support from the business community for multilateral, rules-based trade under the MFN principle was highlighted, alongside calls to strengthen institutional linkages and enhance private-sector capacity to shape trade negotiations and government positions in Africa. Proposed safeguards for inclusivity included unconditional MFN extension, keeping accession open without punitive conditions, allowing flexibility for developing economies to opt in or out as domestic circumstances change, and dedicated capacity-building and technical assistance to prevent a widening economic gap.
  5. Non-Tariff Barriers and the Small Business Perspective: Non-tariff barriers — time, administrative cost, and burden — were described as equally important as tariffs in trade, particularly for small businesses weighing whether participation is worth the hassle. Trade facilitation and transparency were emphasised as critical, along with a call to move beyond just putting information online in facilitating digital trade for small businesses.
  6. E-Commerce, MC14, and Implementation Challenges: The Investment Facilitation for Development Agreement (IFDA) was raised as a relatively low-cost, low-political-risk area to prioritise, though concerns were noted that it could threaten domestic tech sectors and undermine digital import substitution in developing economies; alignment with the African Continental Free Trade Area's (AfCFTA) investment protocols was cited as making it more attractive in that context. On the e-commerce agreement more broadly, progress was described as politically difficult and slow, with digital public infrastructure interoperability facing a limited window as countries roll out new standards (e.g. the EU's digital euro). It was noted that traditional trade agreements and trade officials alone are no longer sufficient - central banks and other stakeholders are increasingly relevant to these discussions.
Speakers
Sahra English, Managing Director, Global Government Affairs, Citigroup; Chair, ICC Global Trade and Investment Commission
H.E. James Baxter, Ambassador and Permanent Representative of Australia to the WTO
Kate Foster, Deputy Head of International Affairs, Federation of Small Businesses
Nicolas Köhler-Suzuki, Advisor, Trade and Economic Security, Jacques Delors Institute
Lunga Maloyi, Head of Economic Policy, Business Unity South Africa
Hiding in Plain Sight: Industrial Policy in Services
 
This session, organised by the International Institute for Sustainable Development (IISD), compared industrial policy approaches for goods and services and discussed the evolving role of policy in shaping the services economy.
  1. Conceptual Differences Between Industrial Policy for Goods and Services: In principle, industrial policy for goods and services shares the same aim — boosting competitiveness, attracting FDI, and improving export performance — but differs in design and impact. Manufacturing policy tends to be product-specific and scale-dependent, while services policy is less so and generally more employment-inclusive and lower-carbon. The panel stressed there is no industrial policy without services, though this has been historically overlooked due to measurement difficulties, and called for treating manufacturing and services as integrated rather than separate policy domains.
  2. Malaysia's Digital Policy Experience: Malaysia's Digital Economy Blueprint, launched in 2021 as a 10-year plan aligned with the Fourth Industrial Revolution, was described as a revolutionary but fragmented process involving multiple agencies, structured in phases covering infrastructure, strategy, and governance.
  3. Sectoral and Structural Shifts in Services: Since services were introduced into WTO frameworks in 1995, key policy areas have included professional services (fairly regulated), human capital (recognition and harmonisation), and social utility services (opened up from public to private too). Two critical shifts were identified: the growth of open digital public infrastructure (e.g., identification systems, unified payment interfaces) and open digital commerce networks — raising the question of whether liberalisation or regulatory development should come first.
  4. The Blurring Line Between Goods and Services: The distinction between goods and services was described as increasingly difficult to draw, as products (e.g., software) increasingly include embedded services and intelligence. Industrial AI was cited as accelerating this shift. The growing role of industrial policy was linked to modern trade agreements, digital partnerships, and innovation-friendly ecosystems, with predictability and private-sector involvement seen as increasingly important.
  5. Gaps in Services Coverage and Legal Frameworks: Infrastructure services (telecoms, transport) and basic connectivity were identified as foundational for industrial policy, alongside education and skills development. The General Agreement on Trade in Services (GATS) was described as an inherently incomplete contract, shaped by ongoing learning, with the WTO called "a victim of its own success" as services rules remain more flexible than goods rules.
  6. Climate and Trade Policy: While services generally carry a lower carbon footprint, the growing energy and water demands of AI were noted as changing this equation. The GATS was defended as not fundamentally flawed — rather, the broader WTO architecture was seen as the area needing attention. The session closed on the view that industrial policy is not a question of whether growth comes from goods or services, but how well the two combine.
Speakers
Alice Tipping, Director, Trade and Sustainable Development, IISD
H.E. Sumathi Balakrishnan, Permanent Representative of Malaysia to the WTO, Ministry of Investment, Trade and Industry, Malaysia
Sumanta Chaudhuri, Principal Adviser in International Trade Policy, Confederation of Indian Industry
Miglė Niauraitė, Senior Director, Government Affairs for Geopolitics and International Relations, Siemens
Pierre Sauvé, Senior Research Fellow and Lecturer, University of Bern's World Trade Institute
 
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