JAKARTA: World Trade Organization (WTO) director-general Ngozi Okonjo-Iweala has suggested that Indonesia join an interim mechanism for resolving trade disputes while defending the organisation’s dispute settlement system despite the paralysis of its Appellate Body.
Okonjo-Iweala noted that WTO members continued to address trade concerns through committees, bilateral negotiations and dispute panels even as the body remained unable to hear appeals, leaving some rulings in legal limbo.
“The biggest, most frustrating myth is that the system is not functioning; it is,” she told reporters at a roundtable interview, ahead of the 2026 Global Review of Aid for Trade at the WTO headquarters in Geneva, Switzerland.
“I think why people are very concerned, and they should be, is because if you get a judgement against you, you can appeal, and because that is not functioning, it goes into the void.”
The Appellate Body has been unable to hear appeals since 2019 after the United States blocked new appointments to the body, alleging it had overstepped its mandate.
Member countries have continued to bring their disputes to the organisation despite the body’s paralysis, with 55 new cases recorded as of October, according to WTO data.
As the organisation works to resolve the impasse, Okonjo-Iweala urged Indonesia to join the Multi-Party Interim Appeal Arbitration Arrangement (MPIA), an alternative mechanism established in 2020 by members including China, Brazil and the European Union.
She added that the MPIA comprised 72 participating members and had settled three cases to date, while emphasising that its existence “did not remove the need” to reform the dispute settlement system.
While acknowledging that reform talks were moving “much more slowly than we’d like”, Okonjo-Iweala said WTO reform remained a priority, stressing the need to restore a two-tier dispute settlement system.
Since President Donald Trump began imposing higher import tariffs this year on most US trading partners, the share of global trade conducted under the WTO’s most favored nation or MFN principle has declined to 72% from around 80%, WTO data showed.
The principle requires members to extend equal treatment to their trading partners, and the decline has stoked concerns that the organisation, established in 1995 to uphold free trade, is being sidelined.
Okonjo-Iweala said the multilateral trading system was facing a critical juncture as rising tariffs, geopolitical conflicts and disruptions to major shipping routes put it under “great stress and strain”, describing the situation as the most serious challenge to the global trading system in decades.
Despite the mounting pressures, she continued, WTO rules continued to provide businesses with stability and predictability amid growing uncertainty.
Indonesia has called for comprehensive and inclusive reform of the global organisation to address rising protectionism, safeguard the interests of developing countries and restore trust in the multilateral trading system, including restoring the WTO’s two-tier dispute settlement system.
The case for more inclusive global trade rules is underscored by the uneven participation of developing economies, whose share of global merchandise exports rose from 38% in 2006 to nearly 50% in 2024. — The Jakarta Post/ANN
