The World Trade Organization (WTO) is facing challenges as the global trading system becomes increasingly characterized by unilateral and bilateral actions. Governments are implementing domestic subsidies, trade restrictions, and carbon border tariffs, disregarding the traditional rules-based multilateral order. The WTO’s role in environmental and trade negotiations is limited, with only “structured discussions” taking place. However, the dispute settlement system may still play a substantive role in adjudicating disputes, such as the European Union’s carbon border adjustment mechanism (CBAM). The US, while not likely to be the first country to bring a CBAM case, has placed the WTO’s Appellate Body in a deep freeze since 2019. The US has proposed ambitious solutions to reform the Appellate Body, including allowing governments to block appeals and raising the standard for review. These suggestions have been rejected by other countries, hindering progress in negotiations. In contrast, China is actively engaging with the WTO and benefiting from its limited constraints, portraying itself as a developing country. Germany’s declining export dependence on China is further highlighted by the EU’s investigation into Chinese subsidies to electric-vehicle manufacturers. Other trade-related news includes the South American Mercosur trade bloc responding to EU demands for more environmental standards and Ukraine threatening to bring a WTO case against EU restrictions on its grain exports.
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