EU ponders a replacement for World Trade Organization

The European Union is considering a replacement for the now largely paralysed World Trade Organization (WTO), according to comments made by European Commission President Ursula von der Leyen and German Chancellor Friedrich Merz.

Von der Leyen, speaking at a press conference following the Thursday EU summit, proposed a "redesigning" of the WTO, which was founded in 1995 to reduce global trade barriers.

Merz spoke of a "new type of trade organization" that could gradually replace "what we no longer have with the WTO today."

The German leader was referring to mechanisms for resolving trade disputes. The European Commission could establish such mechanisms for new EU trade agreements, Merz said. He added that he had already discussed the idea with French President Emmanuel Macron and British Prime Minister Keir Starmer.

"This is an idea in its infancy," he said. "But if the WTO is as dysfunctional as it has been for years and clearly remains so, then we, as those who still believe in free trade, need to come up with something else."

Von der Leyen suggested that cooperation between the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union could be a starting point for redesigning the WTO, which currently has more than 166 member states.

"Of course, understanding what should be reformed for the positive in WTO," she added. This could demonstrate to the world "free trade with a large number of countries is possible on a rules-based foundation."

The WTO has been suffering for years from increasing protectionism, outdated rules and the blockade of its appellate body. Reforms have so far failed due to the lack of consensus among its members.