November 13, 2025 – Trade and its governance need to be restructured to address multiple crises, including wars and climate catastrophes.
Global governance and economic multilateralism are at a critical juncture: a wave of US protectionism is holding countries hostage, with severe economic consequences for countries in the Global South. The collapse of the World Trade Organization (WTO) is part of the accelerated and ongoing decline of the “rules-based order.” While the WTO’s history is marked by unequal power struggles between countries of the Global South and North, the current collapse is unprecedented due to US efforts to dominate the global trade agenda. In this context, the G20 countries can provide the impetus and help accelerate a transition to a reformed trade agenda.
The WTO, currently with 166 members, accounts for 95% of world trade. Its creation represented a significant improvement over the GATT (General Agreement on Tariffs and Trade), a multilateral treaty established in 1948 to reduce trade barriers, such as tariffs and quotas, promoting international trade. This is because the GATT was more of a collection of bilateral agreements than a truly multilateral solution, being a voluntary association. The WTO, in turn, emerged as a structured institution, with a facade of democracy, in which each country had one vote, and sought to exemplify cooperation with decisions by consensus and not by majority.
However, the absence of majority-based decisions has proven to be a fundamental flaw of the WTO. In an unequal world order, countries in subordinate positions can be pressured to comply with the rules, while the hegemonic power can veto decisions by refusing to cooperate. Compliance can be ensured by direct or indirect economic pressure (via the International Monetary Fund) or by explicit or veiled political subordination. It also occurs through plurilateral agreements between a select group of “friendly” countries, which later become models of multilateralism. All these processes cause the WTO to distance itself from the idea of an International Trade Organization proposed by the Havana Charter of 1948, rejected at Bretton Woods.
Within the framework of multilateral trade, trade “liberalization,” which meant greater freedom for an oligopoly of multinational corporations, was promoted by the governments of developed countries to favor their own MNCs (multinational corporations). Less developed countries had to comply and, over time, accept special agreements in areas such as agriculture and information technology. In short, even after the breakdown of the Bretton Woods system and the fixed exchange rate regime in the 1970s, an appearance of economic multilateralism persisted, albeit under a false facade of equality.
The current collapse of the multilateral trading arrangement is a direct result of the US decision to weaken the WTO and impose aggressive protectionist measures, violating the organization’s rules, using tariffs and non-tariff barriers. With the world’s leading market economy deciding not to comply with WTO rules and rendering it ineffective by blocking the appointment of members to the Dispute Settlement Panel, the organization has lost relevance and is also on the verge of internal collapse. This does not mean that the need for multilateralism has ended. On the contrary, contemporary challenges make multilateral cooperation indispensable. The question is whether the WTO can be revitalized and made fit to fulfill its purpose again.
This position raises the question of whether less developed countries can and should push for WTO reform through their “empowerment,” or whether they should create their own truly more egalitarian and democratic South-South plurilateral agreements. If they proceed, it will be up to the countries of the Global North to decide whether they want to join and create a new, more democratic and equitable multilateral arrangement outside the WTO.
As a forum for economic cooperation between countries, the G20 lacks a legal basis. However, given its structure and the serious consequences of the continued weakening of the legal and institutional foundations of global trade, the G20 could provide the political impetus to redesign the rules and institutional structures of world trade. This would mean going beyond the G20’s rhetorical support for free trade and acknowledging the reality of its own protectionist policies, as well as promoting a trade agenda based on principles of equality.
Through horizontal alliances, G20 members can, to some extent, create “containment barriers” to limit the effects of US tariffs, preventing a full-scale global trade war. The G20 can also shift the focus from “dispute resolution” to trade as an instrument of global cooperation, structuring agreements around climate change (e.g., green goods and services), supply chain resilience, and inclusive growth.
This is even more relevant given the escalation of conflicts around the world. As noted in the UN Secretary-General’s proposal for changes to the organization’s structure itself, global humanitarian spending remains insufficient. Around 70% of these resources—or US$18 billion—flow through fragmented supply chains. Therefore, trade and its governance need to be restructured to address multiple crises, including wars and climate catastrophes.
Although the G20 is not a monolithic bloc and includes US allies such as the EU (European Union), Japan, and Canada, as well as rival powers like China, a unified position is essential to transforming the WTO’s unilateral (“America First”) approach into a truly multilateral system. In the absence of reform, the global trading “non-system” would not only be a failed relic of the 1990s, but an obsolete institution incapable of preventing another significant global crisis.
(Nexo Jornal via IDEAs)
