EU Plans WTO Alternative as Trump Escalates Tariffs: FT

By Staff, Agencies

The Financial Times on Friday reported that the European Union is considering the creation of a new dispute resolution mechanism to safeguard the global trade order, as US President Donald Trump intensifies tariffs and further undermines the World Trade Organization (WTO).

The renewed urgency stems from Trump's sustained attacks on the multilateral trading system, including his refusal to appoint judges to the WTO's Appellate Body, rendering it inoperative since 2019.

The United States has also imposed unilateral tariffs on EU steel, aluminum, and other goods, actions that defy WTO procedures, and recently threatened to escalate them to a blanket 10% tariff on all EU imports by July 9.

European leaders gathered in Brussels on Thursday to coordinate a response.

In addition to managing the immediate risk of retaliatory trade measures, the EU is looking beyond the current crisis to reshape the future of global trade governance.

European Commission President Ursula von der Leyen proposed an alliance between the EU and the 11 nations of the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) to create a parallel institution capable of fulfilling the dispute resolution function the WTO can no longer perform.

"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."

She declined to say whether the United States would be invited to join the new framework.