The WTO is the most powerful trade organization in the world. But it is not a tremendous crisis only since Trump. Why the EU is now focusing on another alliance.
It is a rather bulky abbreviation: CPTPP. Involved and literally translated, it is no less cumbersome: Agreement for a comprehensive and advanced transacific partnership. What is meant is a trade alliance of currently twelve states – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The United Kingdom has been there since the end of 2024.
But maybe the EU citizens will get used to the abbreviation CPTPP even faster than expected. Because EU Commission President Ursula von der Leyen has announced that it to work on alternatives to the World Trade Organization (WTO) and want to quickly collect cooperation talks with the CPTPP. From the Leyen even went so far that she said reporters: The “structured cooperation” with the twelve cptpppen countries can be seen as a beginning for the redesign of the WTO “.
Replacement for WTO?
Chancellor Friedrich Merz (CDU) even spoke of a “new kind of trade organization” that can gradually replace “what we no longer have with WTO today”. EU officials subsequently hurried to clarify that the goal was to overcome some of the difficulties of the world trade organization, but not to replace the WTO.
But why a WTO alternative at all? On paper, the world trade organization is the most important organization to regulate international trade. There are 166 countries represented in it, which combine almost 98 percent of the global gross domestic product (GDP).
WTO in the crisis
The main task of the WTO is to draw up rules for this international trade. Two of the most central agreements of the WTO members: tariffs may only be raised in defined borders, state subsidies are only permitted in dimensions.
Also central: the WTO also enables these trade rules. There is a dispute settlement mechanism for this, which should clarify conflicts between states in the sense of the WTO rules.
Appeal paralyzed
Only this for the WTO central dispute resolution no longer works – and for years. “The United States plays a central role in blockade,” says Claudia Schmucker, head of the Center for Geopolitics, Geoeconomy and Technology at the German Society for Foreign Policy. Because since 2019, no judges or judges have been sent to the appeal committee by the United States. The important body that clarifies legal issues is paralyzed.
Unlike often believed, the blockade started long in front of the new US President Donald Trump, says Schmucker. “Barack Obama has already prevented individual sacrifications in the appeal committee.”
But while the dispute was still largely worked under Obama, nothing has been going on since Trump’s first term. “Trump openly said: Now it is enough, we are now blocking the dispute settlement,” says the economist Schmucker.
China has been causing trouble for a long time
The background of the US blockage by Trump is in particular the handling of the WTO with China. According to observers, the country moves with its state capitalism and massive subsidies at least in the gray area, sometimes also outside the WTO rules. But competitive procedures last years. Many recently noticed the WTO as not strong enough to actually set limits China.
This blockade is a serious problem for the EU: because the EU has so far focused strongly on a regular -based international trade. And problems of the WTO or not, without the appeal committee, there is currently no internationally recognized body to accommodate trade disputes between states.
Third of world trade
Therefore, many experts welcomed the EU’s announcement to join the CPTPP of a new trading alliance. On the one hand, there are economic reasons for this: “There are twelve countries whose GDP is almost as large as that of the EU. This is a substantial market that can be opened up,” Holger Görg, director of the research group of international trade and investments at the Kiel Institute for World Economy (IFW Kiel) Evidence Network.de. Almost a third of the global BIP would be united by merging the EU with the other countries, the World Bank data.
The composition of the alliance is also interesting, says Görg: With Mexico and Canada, two countries from North America are represented – an important trade region for the EU, says the foreign trade expert: “The alliance is not only limited to a world region, which is a great advantage.”
Precedes in trade questions
On the other hand, the different from Evidence Network.de However, surveyed trading experts another advantage: The new alliance would be smaller than the WTO, but could work more effectively. “I think the EU could achieve a lot with the alliance. Precisely because it is a coalition of the willing,” says Jürgen Matthes, Head of International Economic Policy at the Cologne Institute (IW).
It also looks similar from the German Society for Foreign Policy: “At the global level, the WTO was hardly possible in the WTO because of the consensus principle with new fair trade rules. Opportunities for new agreements that go beyond the existing WTO rules, especially on the topics, sees sustainable supply chains, clean tech or digital trade.
So far, EU had hesitated
Why did the EU hesitate to seek closeness to the CPTPP in the face of so many advantages? Curiously because the United States actually wanted to play a crucial role in the alliance. “At the time, the USA under Barack Obama negotiated a forerunner, the Trans Pacific Partnership (TPP), in particular with the Pacific countries and brought many of its demands into it. For example, as far as labor law and rules of origin are concerned,” says IW researcher Matthes.
Since then, the EU had not least referred to these other standards when it came to not doing it, explains Matthes. He emphasizes: “It is also the case, but it would be even better for European companies if the EU with its commercial force, at least 15 percent of the global BIP, could negotiate new rules in some places that are more similar to its otherwise usual blueprint.”
The experts are also important to the experts: the EU should never work towards abolishing the WTO. For example, Görg from the IFW Kiel says: “The CPTPP should be complementary to the WTO and a club of the willing gather that precede with common rules.”
