THE GREAT RESHUFFLE

The multilateral trading system is currently grappling with what is arguably one of the most severe shocks in its history. This is no sudden rupture, but rather the culmination of a crisis that has been building up for years. In effect, the seeds of mounting discontent with the existing model of globalisation were sown almost immediately after the establishment of the World Trade Organisation in 1995. By the mid-2020s, a paradoxical situation had emerged: developed and developing nations alike found themselves disillusioned—albeit for different reasons—with the existing multilateral trading system. The wealthy North bristled at what it perceived as “unfair competition” in the face of job losses and industrial decline, whilst the Global South lamented the unfulfilled promises of development aid and glaring inequalities in trade. Both poles are united in their conviction that the current rules of global trade fall short of delivering what they see as fair.

For Washington, this sense of injustice has reached a critical threshold. It must be noted that the US grievances with the multilateral trading system are not new, though previously the approach had been to resolve pending issues through the WTO. The Trump administration made a point to take matters into its own hands, opting for unilateral and bilateral tools. As a result, 13% of global trade—precisely USA’s share— no longer abides by the WTO’s fundamental principles of “bound” tariffs and non-discrimination. These rules have underpinned stability and predictability in world trade for nearly 80 years, from 1948 to early 2025, first under the General Agreement on Tariffs and Trade (GATT) and then the WTO. Now Washington has supplanted them with country-specific tariffs and bilateral trade “deals” negotiated on a divide-and-rule basis, both of which are used to rebalance bilateral trade and economic relations—or, more often than not, to extract nontrade concessions.

The remaining 87% of global trade formally continues to be conducted within the multilateral framework. Yet questions mount over the extent to which these norms are actually adhered to in good faith and with consistency.

Today, China stands as the foremost champion of the multilateral trading system, a stance that is hardly surprising given the country’s impressive economic achievements, largely facilitated by the system’s core rules. Though some tongues would argue that this success owes more to the system’s “grey areas” or outright loopholes, which have enabled China to deploy “non-market” practices—massive subsidies, hidden advantages for state-owned enterprises, intellectual property violations, and the improper use of foreign technologies.

The European Union, which has traditionally positioned itself—and continues to—as the ardent defender of the multilateral trading system and the liberal economic world order, has steadily distanced itself from its erstwhile commitment to multilateralism, trade liberalisation, and open markets. This shift comes amid the EU technologically lagging behind both the US and China in key sectors. Its revised trade policy strategy, published in 2021, enshrined “strategic autonomy” as its guiding paradigm—a commitment to enhancing its capacity to pursue and protect its own external economic interests and rights. In pursuit of this autonomy, the EU has increasingly turned a blind eye to breaches of the WTO rules. Vivid examples include the European Green Deal and its centrepiece, the Carbon Border Adjustment Mechanism. These measures involve Brussels setting its own trade standards and rules to promote EU technologies under the guise of combating climate change.

Ironically, Brussels is now seeking to entrench the very practices it once opposed at the WTO in its legislation. For instance, the proposed Industrial Accelerator Act intends to compel Beijing to transfer technologies and know-how to EU companies as a condition for Chinese investment in specific EU economic sectors—a stance that sharply contrasts with the EU’s 2018 WTO dispute against China’s demands for technology transfers as a prerequisite for market access.

Meanwhile, the EU is scrambling to keep its trade relations with the US afloat, despite Trump’s active efforts to curtail European exporters’ access to the American market. Last July, the European Commission agreed with Washington on the terms of a bilateral deal, effectively a package of unilateral concessions on the EU’s part.

Under this arrangement, European goods will face a 15% tariff, while American goods will enter the EU duty-free. The EU must also commit to purchasing at least USD 750 billion worth of US energy products over three years, ramp up military equipment imports, invest USD 600 billion in the US economy, and work to dismantle non-tariff barriers to American goods entering the EU market.

The European Union lacks the competitive advantages, resources, and capacity to manage them effectively compared to both the US and China. As a result, Brussels has adopted a strategy of hedging: rather than engaging in open trade and economic confrontation with China, it has systematically restricted Chinese companies’ access to its market. As for measures to satisfy its transatlantic partner, these are driven not only by economic considerations but also by political imperatives—including the fear of a mythical “Russian threat.” When viewed purely through an economic lens—including Brussels’ indulgence to Washington’s aggressive push to overhaul the parameters of the multilateral trading system— these steps are clearly detrimental to the interests of European businesses.

A broader trend in modern trade regulation—largely driven by the US— is the increasingly frequent recourse to the concept of national security and its expansive implementation. Article XXI of GATT, which allows deviations from WTO rules to protect national security, once considered “dormant,” has become a convenient pretext for unilateral protectionist measures that erode the very idea of common rules. The export control mechanism is no longer a tool solely for safeguarding national security: it is now a trade policy instrument used to drive growth, foster technological leadership, and exert geopolitical influence. Tariffs introduced under the guise of national security pursuant to Section 232 of the US Trade Expansion Act of 1962—another favoured tool in Trump’s arsenal—are, in reality, elements of industrial policy. They are used to reinvigorate key sectors of the American economy—from metallurgy and automotive manufacturing to pharmaceuticals and microchips.

Sanctions, meanwhile, are openly deployed as a means of coercing foreign governments into altering their policies.

China, too, has demonstrated readiness to wield trade policy instruments to advance geopolitical objectives. The revised Foreign Trade Law of the People’s Republic of China, enacted on December 27, 2025, empowers Beijing to impose trade restrictions in the event of perceived threats to sovereignty, security, or development interests, or should discriminatory measures be adopted against Chinese entities and individuals. One of China’s economic levers is its dominant position in the production of minerals critical to high-tech industries, including defence. In response to Trump tariffs, Beijing imposed sweeping restrictions on exports of rare earth metals critical to the production of semiconductors, automobiles, and defence systems. These were later lifted in exchange for the US tariffs now in place and a temporary trade truce. Beijing has made it abundantly clear that it possesses effective mechanisms for exerting pressure on Washington.

Tensions within the multilateral system are by no means confined to the “Big Three” (US, China, and EU). The balance of power in global trade policy today bears little resemblance to the configuration that prevailed during the founding of the GATT, let alone the Uruguay Round, which culminated in the WTO. Developing nations are no longer a “passive majority” ready to accept the approaches favoured by Western powers in exchange for piecemeal concessions and preferences. Major emerging economies are proactively engaged in international competition and skilfully use WTO rules to advance national industrial and agricultural priorities. Other developing nations are increasingly dissatisfied with their status as a resource base or as low cost manufacturing zones. To amplify their “voice” on multilateral platforms, they rely on more or less cohesive coalitions. These states are aiming to shape a system that secures their full and meaningful participation in global value chains, leading to sustainable economic, social, and technological growth. Though they are unwilling to forgo the benefits and concessions currently afforded by the existing WTO framework. This is particularly true of African nations where markets are fiercely contested, primarily between European, American, and Chinese businesses. China, in particular, is increasingly viewed by many as a source of long-term economic threats.

In this situation, maintaining a multi-vector economic concept may well prove optimal for many developing nations—above all for the majority of them, the priority is to preserve and modernise the multilateral trading rules. In the absence of the latter, without a multilateral forum that provides oversight of their application and offers a platform for negotiations on their improvement, the prospects for these countries to advance their interests—given their limited economic and negotiating resources—are bleak.

The question is whether the WTO can respond swiftly and effectively to adapt and rectify the flaws embedded in the Uruguay Round while addressing the key challenges of our time: theshiftingbalanceofpoweringlobal trade and the growing geopolitical influence in trade policy.

Who is to say that Trump’s tariff policy will not serve as the catalyst? Washington has used unilateral tariffs as a bargaining chip before. In 1971, President Richard Nixon imposed a 10% duty on all imports into the US to secure unilateral advantages from its major trading partners—the EEC, Canada, and Japan. This move ultimately prompted America’s partners to embark on one of the most historic rounds of multilateral trade negotiations—the Tokyo Round—which concluded in 1979 with the existing global trade rules extending onto non-tariff regulation.

Redefining the WTO rules—and, at times, creating a new set from scratch—is currently a focal point of the organisation’s reform negotiations. While WTO members remain Source: WTO website divided over the key challenges facing the multilateral system, the underlying causes of its current predicament, and the factors that have exacerbated these issues, the majority—including Russia—concur that the reform must focus on mitigating the risks of fragmentation in the global trading system, preserving WTO’s proven mechanisms, modernising the tools requiring adjustment to the new geo-economic reality, strengthening accountability for breaches of the “club’s” norms, as well as establishing agreements to govern emerging areas.

Russia has voiced particular concern over unilateral restrictive measures imposed under various “legitimate” pretexts—such as national security or climate policy—that, in reality, conceal an overtly economic rationale. These measures, in effect, undermine non-discrimination and the level playing field. Non-market behaviour—no longer confined to individual transactions but embedded in new national strategies and rules rooted in excessive protectionism— pose a systemic threat to the global trading system.

There can be no doubt that revising multilateral regulation is a protracted process, possibly spanning several years, or even a decade. Hence, one should not expect that the current trends of trade fragmentation, the polarisation of countries into technological blocs, and the rise of protectionism will be reversed in the near term. Amid a fragmented global trading system and unprecedented technological advancement, those countries that can position themselves at the vanguard of new technological trends, balancing their own interests and capabilities within the shifting geopolitical reality, will reap the rewards. The rest risk finding themselves consigned to the periphery of the global economy.

Yet, in the medium to long term, the preservation and development of the multilateral system must remain a strategic imperative for those countries whose economic future depends on predictable rules in international trade relations—and Russia, without question, is among them.