Von der Leyen proposes new global trade institution to replace WTO

European Commission President Ursula von der Leyen has proposed the creation of a new global trade institution, partnering the European Union with the 11 member economies of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as an alternative to the World Trade Organization (WTO).

“Asian countries want to have a structured co-operation with the EU, and the EU want the same,” von der Leyen said. “We can think about this as a beginning of a redesigning the WTO . . . to show to the world that free trade with a large number of countries is possible on a rules-based foundation.”

The proposed institution would seek to uphold principles of multilateral trade and provide a framework for dispute resolution at a time when the WTO is increasingly seen as ineffective. The United States has for several years blocked the WTO’s dispute settlement mechanism, prompting 29 members—including the EU and China—to establish a voluntary alternative, Caliber.Az reports via the Financial Times.

Von der Leyen declined to answer when asked whether the United States would be invited to join the proposed body.

German Chancellor Friedrich Merz welcomed the initiative, revealing he had already discussed a similar concept with French President Emmanuel Macron and UK Prime Minister Sir Keir Starmer.

“The WTO does not work anymore,” Merz said. “Can’t we gradually establish something with our trading partners around the world that institutionally replaces what we actually already envisioned with the WTO, namely a dispute settlement mechanism through an institution like the one the WTO was supposed to be?”

During the same meeting, the European Commission also presented an outline of a potential trade agreement proposed by the United States. While most EU countries support launching negotiations for a quick deal, there is internal disagreement over how to proceed if Washington demands 10 per cent blanket tariffs.

“We are preparing for the possibility that no satisfactory agreement is within reach,” von der Leyen said. “All options remain on the table.”

By Sabina Mammadli