TWN Info Service on WTO and Trade Issues (Feb26/19)
20 February 2026
Third World Network

Trade: China sets out WTO reform agenda, defends rules-based trade
Published in SUNS #10384 dated 20 February 2026

Geneva, 19 Feb (D. Ravi Kanth) — China on 18 February called for preserving an “open, inclusive, transparent and non-discriminatory multilateral trading system” at the World Trade Organization (WTO), while “safeguarding and strengthening the rules-based multilateral trading system through WTO reform and concrete actions,” amid seemingly growing opposition to the ongoing WTO reform process based on three issues led by the Norwegian facilitator, said people familiar with the development.

In its first proposal (WT/GC/W/773) on WTO reform circulated on 13 May 2019, China insisted on safeguarding “the development interests of developing Members” to eliminate the “development deficit in the existing WTO rules” and that “reform shall follow the practice of decision-making by consensus”.

However, the second proposal (WT/GC/W/989) on WTO reform circulated on 18 February broadly continued almost similar positions on several aspects of the rules-based multilateral trading system in general, and the WTO in particular, barring some changes on decision-making, including “agile decision-making” and bringing “flexible” plurilateral negotiations to the forefront – which was not there in the first proposal, said people familiar with the development.

China’s latest position paper on 18 February also differs somewhat from the proposals tabled by the United States and the European Union, which took issue with the continuation of the MFN (most-favored-nation or non-discriminatory) principle and consensus-based decision-making, said people familiar with the development.

WTO and economic globalization

China clings to its consistently held view that “the WTO is an important pillar of multilateralism and a key institution for international economic governance.”

The WTO, according to China, provided “an open, non-discriminatory, stable and predictable framework for economic globalization over the past 30 years.”

China states that during the period from when the WTO was established in 1995 to 2024, “world trade in goods and services expanded more than fivefold, integrating more and more economies into the global value chain, raising living standards worldwide and lifting millions out of poverty.”

The WTO’s Director-General, Ms Ngozi Okonjo-Iweala, last week reportedly launched a proverbial broadside against China at the Munich Security Conference, alleging that it benefitted from the WTO and its special and differential treatment provisions while aggressively pursuing an “export-led” model that apparently generated a $1.2 trillion trade surplus last year.

The DG said China cannot continue with this model, which has diverted its goods to other countries after the US imposed punitive tariffs that reduced China’s exports to the US by 20% last year.

According to the DG, China’s diverted exports have become a burden for other countries.

Although China remained somewhat silent on the DG’s pointed criticisms, Beijing argued in its position paper on WTO reform that “the current trade disruptions further testify to the value of the rules-based multilateral trading system.”

China expressed its confidence in the WTO rules and institutions that the US repeatedly claims are the main cause for China’s success in the global economy.

“Despite heightened trade tensions and unprecedented uncertainties, WTO rules and institutions still serve as a crucial bulwark against trade turbulence and an anchor for the stability and predictability of international trade,” China argued, suggesting that “world trade has not regressed to the beggar-thy-neighbour protectionist practices of the 1930s.”

It pointed out that “global trade-to-GDP ratio holds up at around 60% and 72% of world goods trade is still operating on MFN terms.”

More importantly, it said that “the rules-based multilateral trading system remains critical to WTO members, especially the small and the vulnerable.”

North-South gap

Suggesting that “globalization of the past 30 years does have its flip side,” China said that “persisting North- South gap and rising domestic inequality undermined legitimacy of economic globalization.”

Even “automation and other disruptive technologies displaced manufacturing jobs, diminishing the consensus in favour of free trade,” China lamented.

“External shocks and crises strained supply chains, increasing the sense of insecurity,” China said, adding that “such challenges ought to be managed and addressed through multilateral cooperation, domestic reform and inclusive and mutually beneficial development.”

Without naming the US, China offered some advice to Washington: “Unilateralism and protectionism offer no way out. Blaming the so-called foreign unfair competition shifts attention away from domestic reform that is necessary to unleash competitiveness. While fairness is a broad concept, it could not be judged by one-sided narratives nor measured by market share or trade balance.”

It reminded the critics of the WTO that the global trade body “alone could not provide solutions to all these issues, but it should play an important role in setting, administering and enforcing trade rules to foster greater stability, integration and development.”

According to China, “the chronic inability to update existing rules and develop new rules shifts rule-making outside the WTO and reduces its relevance.”

It reminded the US that it has paralyzed the functioning of the WTO’s Appellate Body since December 2019 by repeatedly blocking the filling of vacancies in the highest adjudicating trade body.

“Paralysis of the Appellate Body has resulted in a partially functioning dispute settlement system that falls short of providing security and predictability to all members.”

Seemingly targeting the US, China said that “on top of that, blatant violation of the MFN principle and abuse of security exceptions are eroding the foundation of the rules-based multilateral trading system, signalling the return of power-based trade relations where the small and the vulnerable would be marginalized.”

Importance of WTO reform

In the face of current “trade turbulence,” China underscored “the importance of meaningful, necessary and comprehensive WTO reform.”

“The fundamental question for WTO reform,” China asked, “is what kind of globalization members want.”

It emphasized that “economic globalization is an unstoppable historical trend and that multilateralism and development are the key to addressing global challenges.”

China said it “believes that WTO reform shall aim to reinforce global trade governance to support economic globalization that is universally beneficial and inclusive.”

Beijing called for “an open, fair, non-discriminatory and rules-based international economic and trade order [that] serves the individual and common interests of all,” arguing that “this historical perspective shall guide the discussions on WTO reform as well as WTO fundamental issues.”

In stark opposition to the positions held by the US and the EU on the MFN principle, China reiterated that “the MFN principle shall remain the bedrock of the WTO.”

More importantly, China demanded that “development dimensions shall be put at the centre of WTO reform.”

Resolve mandated issues

China insisted that “updating the rulebook shall both address long-standing issues and explore new and future- oriented rules, with a view to enhancing the authority, efficacy and relevance of the multilateral trading system.”

Against this backdrop, China said that it “supports developing a progressive, structured and member-driven work plan for WTO reform to be adopted at the WTO’s 14th Ministerial Conference (MC14), starting from identifying priority issues on decision-making, development and fairness and setting up timelines.”

China cautioned that “WTO reform should not be limited to a work plan,” while stating that “member-led dialogues and initiatives that embody the spirit of “reform by action” should be continued and explored one step further, from procedure to substance.”

WTO governance

Amid divisive views on decision-making, where a group of middle-income countries are coalescing around the positions held by the US and the EU, China said that “on WTO governance and decision-making, the reform shall aim to restore trust and enable agile decision-making at different speeds among the diverse membership while respecting the consensus principle, including through enabling flexible plurilateral initiatives with balanced and inclusive guardrails.”

China’s positions on decision-making suggest that there is little difference between the positions held by the US and the EU, on one side, and the “agile decision-making” proposed by China, on the other, said a trade envoy who asked not to be quoted.

However, China also called for middle-ground positions, underscoring the need “to embrace a culture of action and deliver tangible results step by step,” stating that “a middle way between the poles of moving all together and not moving at all will help WTO deliver more for its members.”

Development and fairness

Highlighting its views on “development and fairness,” China said “the reform shall aim to develop tools and rules for trade integration and reinforce a predictable, transparent, and non-discriminatory rules framework for fair competition. Special and differential treatment (SDT), policy space, capacity building and aid for trade are important tools for developing members to achieve development goals.”

At a time when the WTO reform facilitator appears to be suggesting differentiation among developing countries for availing of S&DT, China emphasized that “SDT provisions should be implemented in a more precise and effective manner to better facilitate the full integration of developing members into the multilateral trading system.”

“To further unlock development potentials,” China called for embracing “digital transition and green transition, and [harnessing] artificial intelligence, all of which are opportunities of our time.”

While seemingly remaining silent on the unresolved mandated issues concerning agriculture, China threw its weight behind 21st-century issues, saying that “expanding trade in these areas requires further efforts to develop relevant international rules that foster a conducive trading environment.”

On level-playing field issues, China said “fairness discussions could include government measures that distort international trade [unilateral reciprocal tariffs], notably with respect to potential update to the Agreement on Subsidies and Countervailing Measures (ASCM) and ongoing dialogues on industrial policies, with due regard to the need to maintain flexibility for development policy objectives, including for industrial development.”

In addition, such discussions “must respect members’ distinct economic systems and development stages, and aim to build mutual understanding, trust and convergence, including through more transparency.”

China pushed the issue of “dispute settlement” to the end of its position paper.

It said, “dispute settlement reform shall aim to restore a fully and well-functioning WTO dispute settlement system accessible to all members, providing an anchor for stability and predictability as well as rules-based means to resolve disputes.”

Speaking to SUNS, a South American trade diplomat praised the Chinese proposal on WTO reform, saying that “An open, fair, non-discriminatory and rules-based international economic and trade order serves the individual and common interests of all. This historical perspective shall guide the discussions on WTO reform as well as WTO fundamental issues. The MFN principle shall remain the bedrock of the WTO. Development dimensions shall be put at the centre of WTO reform. Updating the rulebook shall both address long-standing issues and explore new and future-oriented rules, with a view to enhancing the authority, efficacy and relevance of the multilateral trading system.”