The World Trade Organisation (WTO) put to the test of geostrategic tensions and the upsurge of industrial policies

According to the prevailing paradigm at the end of the Cold War, the opening of markets and international cooperation were not only vectors of prosperity but also of systemic rapprochement in both economic and political terms. Among other factors, this Zeitgeist sustained the momentum that led to the creation of the World Trade Organisation (WTO) in 1995, which China and Russia also joined.

In recent years, we have seen a shift towards a new paradigm. The political discourse has been peppered with expressions such as “strategic autonomy”, “de-risking” and “self-reliance”. The main players share the same fear that the control of trade flows may be used as a means of pressure. Diversification of supply sources is also advocated to reduce the risks inherent in the strong interdependencies resulting from economic globalisation.

Restrictions on trade and foreign investment as well as massive support have already been deployed to varying degrees in different countries. However, the rearrangement of international trade subsequent to these policies has not so far led to a breakdown of globalisation or a collapse in trade flows.

This essay focuses on one aspect of the issue: the consequences for the WTO of the upsurge of industrial policies. It happens all too often that the WTO rules currently in force no longer fulfil their role as guardrails, either because they are disregarded or because they are not adapted to the new situation.

To reinvigorate the WTO, we propose the terms of an initiative designed to support a new modus vivendi by means of modernised rules. The aim would be to minimise the damaging trade effects of industrial policies, while identifying the situations and conditions in which they could be envisaged. The analysis will, inter alia, address direct and indirect state support (subsidies), the instruments most frequently used by interventionist governments. 

Unfortunately, cooperative approaches do not have the wind in their sails. The fate of the outlined suggestions is therefore very uncertain. They are mainly intended to liven up discussions and should be weighed with a touch of critical thinking. Aware of the pitfalls of a complicated situation, we also sketch out, if not quick solutions, then at least avenues conducive to constructive dialogue.