TWN Info Service on WTO and Trade Issues (Oct26/15)
14 October 2026
Third World Network

WTO: China sets out "why" & "what" of reform, defends multilateralism
Published in SUNS #10533 dated 14 October 2026 

Geneva, 13 Oct (D. Ravi Kanth) -- China has apparently offered its "perspectives on the "why" and the "what" of World Trade Organization reform," while seeking to resurrect  economic globalization with updated WTO rules, during a discussion on 12 October on the WTO reform track on foundational issues, said people familiar with the development.

While insisting that it "does not propose any specific issue to be discussed as so-called foundational issues in the World Trade Organization Reform discussions on 12 October," China provided a comprehensive assessment as to what went wrong with globalization and how it can be addressed with updated WTO rules through reforms, said people familiar with the development.

During the discussions on foundational issues convened by the facilitator, Ambassador Sumathi Balakrishnan of Malaysia, China began answering its own rhetorical questions as to why the WTO needs reform, as well as how members should understand "the root causes of the challenges we face," according to people familiar with the discussions.

China is understood to have stated that it "believes that any serious discussion of WTO reform should begin with a balanced assessment of economic globalization and the multilateral trading system."

ECONOMIC GLOBALIZATION

Highlighting the issue of "economic globalization," which, in China's view, "brought tremendous opportunities to the world economy," China noted that the rules-based multilateral trading system has been a powerful engine of global trade and economic growth, and an important pillar of peace and prosperity.

China said that the WTO "architecture, built upon non-discrimination, binding commitments, transparency, institutionalized dialogue, binding dispute settlement and appropriate flexibilities, has provided a robust framework for global trade."

More importantly, the WTO system "has enhanced predictability and enabled many developing Members to pursue development through trade."

Citing WTO statistics showing that the share of developing economies in global GDP increased from 18.9 percent in 1995 to 41.3 percent in 2025, China noted that their share of global exports rose from 20.7 percent to 43.6 percent.

It emphasized that "the developmental contribution of this system should be recognized, but not as a defined challenge to the WTO itself."

China said it "fully recognizes that economic globalization has also generated challenges," adding that "the benefits of globalization have not always been distributed evenly."

"Across economies and within economies, the gains and adjustment costs can be very different," China said in its intervention at the informal meeting on foundational issues.

China acknowledged that "many developing economies continue to face serious constraints in diversifying their exports, attracting investment, improving productive capacity and moving into higher value-added activities."

In this context, China said, "The development gap in international trade has therefore not disappeared," pointing out that "least-developed Members still account for less than 2 percent of global GDP, not reflecting its vast and largely untapped potential."

China pointed out that "in many economies, even where the benefits of trade are widely distributed across society, the costs of economic adjustment are often concentrated in particular sectors and communities in lack of adequate domestic policies," suggesting that a lack of distributional equity can generate domestic dissatisfaction, according to people familiar with the development.

Without naming the United States, China said such domestic dissatisfaction is "expressed as dissatisfaction with trade itself, placing further pressure on the multilateral trading system."

China stated that the fact that "the benefits of globalization are uneven does not invalidate the substantial achievements of the multilateral trading system."

"Nor does it diminish the importance of the WTO," China said, arguing that "it certainly does not mean that globalization itself can simply be reversed."

China argued that "pressures generated by globalization are increasingly being transmitted into the multilateral trading system, while the system itself has not always been able to evolve at the same pace as changes in the global economy."

According to China, countries are witnessing "profound changes in production, technology, investment, digitalization, industrial policy, environmental policy and global supply chains."

While governments "are pursuing a wider range of economic and public policy objectives," trade is "interacting more closely than ever with issues that were previously considered outside the traditional trade agenda."

China said that "when WTO rules fail to keep pace with the evolution of the global economy, uncertainty rises" - wherein "some members resort to restrictive and power-based measures, [fragmentation] rises."

Further, according to China, "when development needs are not adequately addressed, the attraction of WTO reform is not fully warranted."

In short, China justified its latest proposal by stressing that "the core challenge lies in the fact that economic globalization, as it evolves, has not delivered sufficiently inclusive and broad-based benefits, and the WTO has not kept pace with the times."

Therefore, according to China, "the fundamental question guiding WTO reform must be: How can rules-based multilateral governance better enable Members to harness economic globalization and achieve better development?"

China said, "trade policy alone cannot address every macroeconomic or structural challenge."

"Nor can WTO, by itself, resolve all of the social, technological, financial and distributional consequences associated with globalization," China said.

The WTO must "focus on what it can realistically do: provide common rules, improve predictability, facilitate cooperation, manage differences and support development."

MULTILATERALISM

China argued that, from its perspective, "the right response to the challenges of globalization is not to weaken multilateralism, not to treat unilateral measures as substitutes for common rules."

"Nor is it to seek security by building smaller circles or organizing the global economy into camps," China said, in what appears to be a clear criticism at the US positions.

Therefore, "the right response is better global economic governance and a more effective, more responsive, and more contemporary multilateral trading system."

China maintained that its reform proposals reflected the underlying dynamic to "explore ways to update rules while upholding the fundamental principles of the WTO."

In conclusion, China highlighted two "foundational" observations regarding the reform efforts.

These include:

1. WTO reform should preserve the fundamental importance of the most-favored-nation (MFN) principle. "MFN is not simply one rule among many. It is a cornerstone of the system and reflects the basic idea that all Members, regardless of their size or economic strength, should trade under common rules and enjoy equal treatment."

China said the value of MFN "lies precisely in preventing international trade from being determined by simply bilateral bargaining power. For this reason, MFN should be applied consistently across sectors, including but not limited to trade in goods, services, IPRs, rather than being accepted where convenient and qualified where not."

2. China stated: "The exceptions to MFN should remain limited and well defined. They should not become a means of turning MFN into a conditional obligation or creating new avenues for unilateral measures. Concerns about competitiveness or the level playing field should be addressed through the relevant WTO rules and reform workstreams, rather than by weakening one of the foundational principles of the multilateral system. Reform should not be driven by predetermined outcomes." +