World Trade Report 2026: WTO warns against bloc formation

What would world trade look like if the World Trade Organization (WTO) were abolished? Without WTO rules, global exports would decline by almost 27 percent by 2050 and the global economy would shrink by almost 7 percent. The organization calculated this in this year's World Trade Report 2026, which was presented on Tuesday in Geneva.

In times of geopolitical wars and trade crises, US protectionism, China's export surpluses and more bilateral free trade agreements, which the EU is also vehemently promoting, the WTO provides arguments for its continued existence. “We all have something to lose if the stability of the system is undermined,” said WTO chief Ngozi Okonjo-Iweala in Geneva on Tuesday.

The analysis models in various scenarios how the fragmentation of the global economy into blocs and multiple free trade agreements would affect global growth over the next 25 years. According to this, more multilateral cooperation would lead to an increase of 2.9 percent. Geopolitical fragmentation or the abolition of WTO rules would hit the poorest countries, the so-called LDCs, particularly hard. The WTO predicts a decline in economic output of 16.5 percent. For rich countries it would be a drop of 4.5 percent.

The WTO also admits that countries benefit very differently from their existing rules. The poorest countries, the so-called LDCs, continue to account for less than 1 percent of world trade. This reflects not only the production volumes, but also the value of exports. Many developing countries remain dependent on cheap raw material exports. According to the report, the trade costs of the poorest countries are 50 percent higher than those of rich countries. Trade barriers also play a role, including requirements for certain standards and certification costs.

The WTO has been blocked by deep differences for 25 years. Many developing countries have always criticized rich countries' agricultural subsidies. The USA and the EU in particular accuse China of distorting competition through industrial subsidies. For years, the USA has been blocking new judges from being appointed to the dispute settlement mechanism. In order to remain able to act, the WTO is currently relying on so-called plurilateral agreements between many, but not all, members. A WTO reform process has been started, but so far there has been little movement.

Around 72 percent of world trade is still subject to the central principle of the WTO, the most-favored-nation clause (MFN). It requires WTO members to grant trade benefits equally to all partners, while providing certain exemptions for poorer countries to protect emerging economies. At the beginning of 2025 it was still 80 percent of world trade: the effects of tariff increases by the USA and the increasing importance of trade agreements are becoming noticeable.

In the current report, the WTO itself does not make any reform proposals, but rather analyzes where adjustments to individual rules would be necessary. It focuses on increasing geopolitical tensions and a changing multipolar economy, new conditions through increased trade in services, digitalization and artificial intelligence, and also the rules that governments are already putting in place to control these developments.