Observers say reforms at the 30-year-old trade watchdog are urgently needed, with some believing the future of the organization is at stake. The WTO did not immediately comment.

Gridlocked negotiations

In particular, the consensus rule whereby all 166 members must agree to pass new trade deals has gridlocked negotiations for years, blocking even those that enjoy near universal support.

Norway’s WTO ambassador Petter Olberg wrote in the December 12 document seen by Reuters that the range of ideas for reforming decision-making meant that the issue cannot be resolved at a ministerial meeting in March 2026. However, he said progress was being made and ministers meeting in Yaounde, Cameroon should agree on a framework to move forward.

The U.S. voiced frustration in a communication sent to members that blockages in the consensus-based system were stopping members from joining plurilateral agreements. These deals allow groups of interested members to strike deals among themselves, with an option for others to sign on later.

It warned that this threatened the organization’s viability and could drive countries to negotiate new deals outside it.

Most Favoured Nation reform

The U.S. also called for reform discussions to address one of the WTO’s core principles – Most Favoured Nation (MFN) – which requires members to treat others equally. It said MFN was designed for an era where trade partners were expected to adopt open, market-oriented trade policies.

“That expectation was naive, and that era has passed,” it said in a statement.

“If the WTO does not reform by making tangible improvements in those areas that are central to its mission, it will continue its path toward irrelevancy,” the U.S. said in the communication.

A diplomatic source cautioned that the U.S.’ position was not widely supported by members.

“The U.S. views on WTO reform are far from those of most members and even challenge the WTO’s purpose and core principles. Simply put, without MFN, there’s no real multilateralism,” the source told Reuters.

Since U.S. President Donald Trump began imposing higher import tariffs this year on most trading partners, the share of global trade conducted under the WTO’s Most-Favoured-Nation terms is down from about 80 per cent to 72 per cent, WTO data shows.

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The U.S. will cut extra tariffs it imposed on Chinese imports in April this year to 30 per cent from 145 per cent and Chinese duties on U.S. imports will fall to 10 per cent from 125 per cent for the next 90 days, the two sides said on Monday.

The accord does not include the “de minimis” exemptions for low-value e-commerce shipments from China and Hong Kong, which the Trump administration terminated on May 2, according to a source familiar with the negotiations. The duties are also still higher than before U.S. President Donald Trump announced a raft of tariffs on April 2.

‘Very positive’ news for economies

However, the deal went further than many analysts had expected following weeks of confrontational rhetoric on trade.

“This is better than I expected. I thought tariffs would be cut to somewhere around 50 per cent,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.

“Obviously, this is very positive news for economies in both countries and for the global economy, and makes investors much less concerned about the damage to global supply chains in the short term,” Zhang added.

Wall Street stocks jumped and the dollar rose, while gold prices fell on the news, which helped allay concerns about a downturn triggered by Trump’s escalation of tariffs aimed at narrowing the U.S. trade deficit.

“Both countries represented their national interest very well,” U.S. Treasury Secretary Scott Bessent said after talks with Chinese officials in Geneva. “We both have an interest in balanced trade, the U.S. will continue moving towards that.”

Bessent was speaking alongside U.S. Trade Representative Jamieson Greer after the weekend talks in neutral Switzerland in which both sides hailed progress on narrowing differences.

“The consensus from both delegations this weekend is neither side wants a decoupling,” Bessent said. “And what had occurred with these very high tariffs … was the equivalent of an embargo, and neither side wants that. We do want trade.”

The tariff dispute had brought nearly $600 billion (C$839.7 billion) in two-way trade to a standstill, disrupting supply chains, sparking fears of stagflation and triggering some layoffs.

The Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since Trump returned to power and hit China particularly hard with his global tariff blitz.

China’s Vice Premier He Lifeng, speaking to reporters at China’s mission to World Trade Organization late on Sunday, described the talks as “candid, in-depth and constructive” on issues of concern to both countries.

“The meeting achieved substantial progress, and reached important consensus,” He said.

More discussions to come

Since taking office in January, Trump had hiked the tariffs paid by U.S. importers for goods from China to 145 per cent, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.

China hit back by putting export curbs on some rare earth elements, vital for U.S. manufacturers of weapons and electronic consumer goods, and raising tariffs on U.S. goods to 125 per cent.

Bessent told U.S. media that there was still much work to do, but neither the place nor time for a next meeting had been set.

“We got a lot done over two days. So I would imagine that in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” he told CNBC.

“Over the next 90 days we have a mechanism to meet with the Chinese trade delegation,” he told MSNBC in a separate interview. “We will be discussing tariffs, non-tariff trade barriers, currencies and their subsidies of labor and capital, and how we can open up China to American businesses.”

He said Chinese officials had understood the importance of addressing the fentanyl crisis and for the first time appeared to be working to halt the flow of pre-cursor drugs into the U.S.

Trump levied the tariffs in part after declaring a national emergency over fentanyl entering the United States.

— Additional reporting by Andrew Silver in Shanghai and Lisa Barrington in Seoul

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The speech late on Thursday by Roberto Azevedo, who stepped down as director-general in 2020 during Trump’s first term, was summarized by trade sources who attended a WTO anniversary event.

He said a loss of appetite for shared global trading rules could encourage the creation of a replacement for the WTO that would exclude some current members, adding, according to his team: “If we don’t change, we are dead.”

The current WTO director-general, Ngozi Okonjo-Iweala, told members that a reform process must begin in Geneva ahead of a ministerial meeting in Cameroon next year.

“We need to formulate the right questions to be answered … and put in place a member-owned process to drive it,” she said.

Global markets were ending the week as they began, in turmoil, despite a brief respite on Wednesday after Trump paused duties above 10 per cent for most countries except China.

Until now, talks on updating WTO rules have struggled partly because all 166 members must agree by consensus. Efforts to fix its top appeals court, paralyzed by Trump in his first term, have failed.

Supachai Panitchpakdi, director-general from 2002-2005, said members must reform the WTO urgently.

“It’s either that or we go into a big recession … even worse than the last 2008 financial crisis, because this time it will be trade-led … And then there’s no way to pull out,” he told Reuters.

He proposed to trade delegates on Thursday a month of tariff talks among members, followed by short discussions to reduce barriers and establish new trade rules.

At the same event, a group of 39 states including China, Canada and Britain voiced support for the WTO and called for “bold, collective action” to ensure it remains the bedrock of a free, fair and rules-based system.

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Reuters reported on March 27 that the U.S., the top donor to the WTO budget, had paused its contributions including unpaid dues for 2024 pending a review of its support to international bodies – in a move confirmed by the U.S. government.

Why it matters: The World Trade Organization provides a mechanism to settle trade disputes. In recent days, Canada has initiated a complaint to the WTO about U.S. auto tariffs.

Since then, trade sources told Reuters that WTO staff had been informed about incoming measures to reduce spending such as not replacing some retiring staff or short-term hires.

The WTO, which has 630 staff, said that it has no plans for fixed and regular staff reductions at this time.

“In a recent town hall, the Director-General (Ngozi Okonjo-Iweala) informed staff that in response to the current financial climate, Senior Management is exercising fiscal prudence by curtailing or deferring expenditures as necessary,” WTO spokesperson Ismaila Dieng said in response to Reuters’ questions.

He added that a newly formed ‘Staffing Resource Needs Committee’ would review vacancies and related expenditures.

The measures come against a backdrop of recent U.S. criticism of WTO spending and five years after its top court was paralyzed under Trump’s first term, amid U.S. concerns about overreach.

A U.S. delegate previously raised budget concerns about a meeting to mark the 30th anniversary of the organization which is now grappling with the impact of U.S. President Donald Trump’s tariffs on global trade.

Washington will also raise “systemic concerns” about the WTO’s actions at a meeting on Wednesday, an agenda document showed.

“… It has become readily apparent that the (WTO) Secretariat is moving away from its Member-driven purposes, and is attempting to re-invent itself into a resource to be provided to the public, regardless of Members’ views or the impact that such activities may be having on Members’ interests or budget contributions,” a U.S. delegation document showed.

The WTO budget of 205 million Swiss francs (C$338.6 million) is smaller than many other global bodies, some of which have been badly hit by Trump’s spending cuts.

Delegates say that it would theoretically be easy for any one of the WTO’s 166 members to entirely block the next budget later this year since such decisions must be taken by consensus.

A spokesperson for the U.S. mission in Geneva did not immediately respond to a request for comment.

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The official also urged stronger efforts to reduce the risk of transmission of the virus to new species of animals and to humans.

“What we really need globally, in the U.S. and abroad, is much stronger surveillance in animals, in wild birds, in poultry, in animals that are known to be susceptible to infection,” WHO epidemiologist Maria Van Kerkhove told an online press conference.

The agency said it is in touch with partner agencies such as the World Organization for Animal Health and Food and Agriculture Organization to increase surveillance in animals.

The U.S. Department of Agriculture last month confirmed the presence of H5N1 bird flu in a pig on a backyard farm in Oregon.

Pigs represent a particular concern for the spread of bird flu because they can become co-infected with bird and human viruses, which could swap genes to form a new, more dangerous virus that can more easily infect humans.

“For us at the WHO we are always in a constant state of readiness as it relates to influenza, because it isn’t a matter of if, it’s a matter of when,” Kerkhove said, adding that the risk to the general population for avian influenza remains low globally.

So far, 55 human cases of H5N1 bird flu, including in a child, have been reported in the United States this year, according to the U.S. Centers for Disease Control and Prevention. A teenager in B.C. was also reported to be hospitalized with avian influenza.

Most of these cases were among farm workers who had contact with infected poultry or cows. There has been no person-to-person spread associated with any of the H5N1 bird flu cases, according to the CDC, but dairy and other farm workers are considered to be at higher risk of contracting the virus.

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The almost 30-year-old global watchdog, whose rules underpin 75 per cent of global commerce, tries to strike deals by consensus, but such efforts are becoming more difficult amid signs that the global economy is fragmenting into separate blocs.

“Let’s not pretend that any of this will be easy,” Okonjo-Iweala said in her opening speech, describing the atmosphere as “tougher” than the WTO’s last 2022 meeting, citing wars, tensions and elections and signs that trade growth will undershoot the organization’s own estimate.

She called on ministers to “roll up their sleeves” and complete negotiations, but seemed to rule out any deal in Abu Dhabi on reforming the body’s mothballed appeals court.

“We are not there yet,” she said.

Thani Al Zeyoudi, conference chair and UAE’s foreign trade minister said in an opening address: “The multilateral trading system with the WTO at its core is at a critical juncture; it is confronting many challenges.

“I now ask all of you to show the world that the WTO is alive and well and fully capable to deliver results that matter to people everywhere,” he said.

Some delegates privately voiced concerns that India’s trade minister, seen as the main holdout on some key issues including agriculture, was absent on Monday although New Delhi said he would be in Abu Dhabi on Tuesday.

New members

Negotiators say they remain hopeful for an agreement that could buoy global fish stocks and protect fishermen by banning government subsidies.

Other outcomes from the four-day meeting that are either definite or achievable are the accession of two new members – Comoros and East Timor – and a deal among around 120 countries to remove development-hampering investment barriers.

Tougher areas are extending a 25-year moratorium on applying tariffs on digital trade, which South Africa and India oppose, and an agreement on agriculture trade rules that has eluded negotiators for decades.

Indian Commerce Minister Piyush Goyal, who was in New Delhi on Monday at a textiles event, repeated in a statement posted to the WTO website India’s insistence on a controversial stand-alone permanent waiver to WTO rules that currently restrict domestic agriculture subsidies on food items like rice.

“I think this week is really about trying to consolidate progress from two years ago and build on where possible, but I don’t think there’s going to be major new breakthroughs in new areas,” said Simon Conveney, Ireland’s minister for Enterprise, Trade and Employment, referring to the WTO’s 2022 meeting in Geneva.

U.S. Trade Representative Katherine Tai said the meeting was a chance to “chart a future path together” and that success should not be measured by the number of deals.

Her office later said she reaffirmed U.S. priorities for the meeting, including “restoring transparency, rebuilding the WTO to address today’s challenges, and dispute settlement reform.

Tai also met with Chinese Commerce Minister Wang Wentao, where she raised concerns about China’s excess steel capacity impacting global markets and the “ongoing imbalances caused by China’s state-led, non-market approach to trade policy,” USTR said.

Working overtime

One factor that could help the WTO negotiations is the determination of Okonjo-Iweala, a former Nigerian finance minister, whose insistence on all-night meetings helped deliver a package of deals in Geneva in 2022. She has already asked ministers to plan for the four-day talks to run overtime.

The European Trade Commissioner Valdis Dombrovskis said that uncertainty and multiple crises were impacting the rules-based global order. “This tense geopolitical environment makes multilateral organizations like the WTO much more, not less, important,” he said.

–Additional reporting for Reuters by Alexander Cornwell.

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“A big volume was (exported) in December… but the rate (in January) will drop,” Solsky told national television.

“There are problems in the Red Sea and part of our exports went and are going through the Red Sea to China, Asia and African countries and therefore the movement of ships has slowed down a lot,” he said.

Attacks by Iran-allied Houthi militia in Yemen on ships in the region since November have slowed trade between Asia and Europe and alarmed major powers. The U.S. has begun strikes on Houthi sites aiming to degrade their ability to attack shipping in the Red Sea.

Solsky said an additional reason for lower shipments was the New Year holidays.

Ukraine exported 4.8 million metric tons of food via its Black Sea corridor in December, surpassing the maximum monthly volume exported under a previous U.N.-brokered grain deal.

Prior to Russia’s invasion in February 2022 Ukraine exported about 6 million tons of food per month via the Black Sea.

It now relies on the corridor along its western Black Sea coast near Romania and Bulgaria, its small ports on the Danube River, and exports over land via eastern Europe.

Kyiv believes it has managed to dislodge Russian forces from the western part of the Black Sea, securing grain exports which are crucial to its economy as well as for important imports.

Wheat shipments plunge

Wheat shipments via the Suez Canal fell by almost 40 per cent in the first half of January to 0.5 million metric tons due to attacks in the Red Sea and Gulf of Aden, the World Trade Organization said today on social media platform X (formerly Twitter).

The WTO data, based on a dashboard developed jointly by the International Grains Council (IGC) and the World Trade Organization, adds to signs of ship diversions following attacks on vessels by Iran-aligned Houthi militants in Yemen.

Earlier this week, shipping sources had said they expected some grain cargo diversions but that most would continue to risk passing through the Suez Canal which is the shortest shipping route between Europe and Asia.

In December, around 8 per cent of wheat shipments from the European Union, Russia and Ukraine that would typically travel via the Suez Canal followed alternative routes, the WTO said.

That surged to around 42 per cent in the first half of January, it said. Prior to the attacks, the share of alternative routes was only about 3 per cent on average, it said.

However, it appeared that few if any shipments were being cancelled altogether. “The surging number of diversions appears to have had a limited impact to date on total deliveries,” the WTO said.

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The WTO’s appeals bench, which rules on top disputes, has been mothballed for over two years due to Trump-era blockages of adjudicator appointments. Under U.S. President Joe Biden, Washington has resisted calls by WTO members to approve appointments and has instead been leading negotiations on how to reboot the WTO’s dispute system.

“Our goal is a fully functioning (dispute system) by 2024,” deputy U.S. Trade Representative Maria Pagan told Reuters in her first public comments on the closed-door talks, saying Washington was “very committed” to reforms.

Asked whether it was possible to revive the Appellate Body, Pagan did not rule it out. “I think it needs a lot of revamping,” she said. The U.S. has criticized the WTO’s alleged overreach and lengthy processes and it has strongly contested some of its recent rulings against the United States.

The U.S.-led consultations with more than 70 countries over the past year have involved 12 reform themes expected to result in concrete proposals, Pagan said.

She declined to give details but suggested they would include alternatives to formal disputes such as mediation.

The appeals bench freeze means 24 WTO cases are stuck in legal purgatory because the losing party has appealed into a void.

WTO director-general Ngozi Okonjo-Iweala has previously said the global trade body can reach deals on difficult topics like reform by its next major meeting (MC13) in early 2024, although Pagan said that might be too soon.

“We don’t view this as work that has to be done by MC13. But that does not mean that we’re not committed to working as quickly as we can on this because we are,” she said.

Some delegates have expressed disappointment with the U.S. engagement with the 28-year-old WTO, which it helped establish. Theycite Washington’s no-show at a key WTO meeting at Davos last week as an example. However, Pagan has refuted this, saying there was a scheduling clash.

WTO members agreed on the body’s first global trade rules reform in years last June which cut fish subsidies, but progress has stalled amid a dispute over who will chair talks. Pagan described the process as “frustrating” but said she was hopeful a breakthrough had been found, without elaborating.

— Emma Farge is a senior Reuters correspondent in Geneva; additional reporting by Philip Blenkinsop in Brussels.

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The deals were ground out over five days of bargaining at a conference of more than 100 trade ministers that was seen as a test of the ability of nations to strike multilateral trade deals amid geopolitical tensions heightened by the Ukraine war.

Delegates cheered after they passed the package of six agreements just before dawn on Friday.

Director-general Ngozi Okonjo-Iweala told them: “The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”

Earlier she had appealed to WTO members to consider the “delicate balance” required after nearly round-the-clock talks that were extended for an extra two days and have at times been charged with anger and accusations.

At one stage, a series of demands from India, which sees itself as the champion of poor farmers and fishermen as well as developing countries, appeared set to paralyze talks but accommodations were found, trade sources said.

The WTO’s rules dictate that all decisions are taken by consensus, with any single member able to exercise a veto.

The package, which Okonjo-Iweala called “unprecedented,” included the two highest profile deals under consideration — on fisheries and on a partial waiver of intellectual property (IP) rights for COVID-19 vaccines.

The accord to curb fishing subsidies is only the second multilateral agreement setting new global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.

The fishing subsidies deal has the potential to reverse collapsing fish stocks. Though pared back significantly, it still drew approval.

“This is a turning point in addressing one of the key drivers of global over-fishing,” said Isabel Jarrett, manager of The Pew Charitable Trusts’ campaign to reduce harmful fisheries subsidies.

The deal on a partial IP waiver to allow developing countries to produce and export COVID-19 vaccines has divided the WTO for nearly two years, but finally passed. It has also drawn the fiercest criticism from campaign groups that say it barely expands on an existing exemption in WTO rules and is too narrow by not covering therapeutics and diagnostics.

“Put simply, it is a technocratic fudge aimed at saving reputations, not lives,” said Max Lawson, co-chair of the People’s Vaccine Alliance.

One agreement had also been reached on Thursday, on maintaining a moratorium on e-commerce tariffs, which is considered vital to allow the free flow of data worldwide.

In her closing statement to ministers, Okonjo-Iweala said that “while we all agree on the vital importance of agriculture in our economies, differences on some issues, including public stockholding for food security purposes, domestic support, cotton and market access, meant that we could not achieve consensus on a new roadmap for future work.”

However, she added, ministers have “taken steps to make trade in food and agricultural inputs more predictable, and hence prices less volatile” and are “going to make it easier for the World Food Programme to do its difficult job of feeding millions of the world’s most vulnerable people.”

Specifically, WTO members adopted a ministerial decision that they won’t impose export prohibitions or restrictions on food “purchased for non-commercial humanitarian purposes” by the WFP — except for WTO-compliant measures a member country imposes to ensure its “domestic food security.”

In a separate declaration on the emergency response to food insecurity, WTO ministers said they “commit to take concrete steps to facilitate trade and improve the functioning and long-term resilience of global markets for food and agriculture, including cereals, fertilizers, and other agriculture production inputs.”

Last week, 13 Canadian farm and ag industry organizations had signed onto a joint statement by like-minded groups in eight ag-exporting countries, calling for much more concrete decisions from the ministerial meeting.

Those groups, including the Canadian Cattlemen’s Association, Canadian Pork Council, Pulse Canada and Cereals Canada, among others, had said that “with record food prices and ever-increasing food insecurity, it would be unimaginable for the WTO to fail to deliver a substantial outcome on agriculture” at this week’s conference.

Overall, however, many observers were broadly supportive and said Friday that the deals reached should boost the WTO — which was weakened by former U.S. President Donald Trump’s crippling of its ability to intervene in trade disputes — and set it on a course for reform.

“There’s now a package on the table at (the ministerial conference) that would provide a real boost to the credibility and strength of the WTO system,” said John Denton, secretary general of the International Chamber of Commerce, before the package passed.

— Reporting for Reuters by Emma Farge and Philip Blenkinsop. Includes files from Glacier FarmMedia Network staff.

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A report by the U.N. body showed on Thursday that some 89.3 million people were forcibly displaced worldwide as a result of persecution, conflict, abuse and violence at the end of 2021. Since then, millions more have fled Ukraine or been displaced within its borders, with price hikes linked to blocked grain exports set to stoke more displacement elsewhere.

“If you have a food crisis on top of everything I have described — war, human rights, climate — it will just accelerate the trends I’ve described in this report,” Filippo Grandi told journalists this week, describing the figures as “staggering.

“Clearly the impact if this is not resolved quickly will be pretty devastating.” Already, more people were fleeing as a result of price hikes and violent insurgencies in Africa’s Sahel region, he said.

Overall, the number of displaced has increased every year over the past decade, the UNHCR report says. It is now more than double the 42.7 million people displaced in 2012.

Grandi also criticized what he called a “monopoly” of resources given to Ukraine whereas other programs to help the displaced were underfunded.

“Ukraine should not make us forget other crises,” he said, mentioning a two-year-old conflict in Ethiopia and a drought in the Horn of Africa.

The European Union’s response to refugee crises has been “unequal,” Grandi added. He compared the bickering between states over taking in small groups of migrants crossing the Mediterranean by boat with EU countries’ generosity with Ukrainian refugees since Russia’s invasion in February.

“Certainly it proves an important point: responding to refugee influxes, to the arrival of desperate people on the shores or borders of rich countries is not unmanageable,” he said. The report says that low-and-middle income countries hosted 83 per cent of the world’s refugees at the end of 2021.

— Emma Farge is a Reuters correspondent covering the United Nations and other international organizations from Geneva; additional reporting by Wendell Roelf.

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