Global trade was once built on the simple promise that countries would compete under agreed rules rather than raw economic power. That promise is under ever-increasing strain. The challenge lies in the weakening of the institutions that have long governed international commerce. It is amid this global instability that the Asia Pacific emerges as one of the few regions capable of preserving economic integration and upholding the rules-based trading system.
The World Trade Organization (WTO) remains the cornerstone of the multilateral trading system. Yet two of its essential functions have steadily eroded — the credibility of dispute settlement and the discipline against unilateral tariff coercion. These developments have pushed the trading system away from rules and towards power.
For decades, the WTO dispute settlement mechanism enabled economies of all sizes to resolve disputes under common rules, reducing the risk that trade conflicts would become power politics. Since the Appellate Body ceased functioning in 2019, that final layer of enforceability has largely disappeared.
In the years prior to the paralysis of the Appellate Body, some major economies — particularly the United States — had argued that the system had exceeded its mandate through judicial overreach and was not adequately responding to new forms of state-driven industrial competition. Many members also questioned whether existing WTO disciplines had kept pace with the growing role of industrial subsidies, state intervention and economic coercion. These concerns underscored the need for stronger and updated multilateral rules.
