Market share Division and dysfunction cloud WTO's vision

When trade ministers gathered in the Moroccan city of Marrakech 30 years ago this month to sign the agreement creating the World Trade Organization (WTO), the mood was celebratory. The Berlin Wall had come down only recently, communism had collapsed, and there was optimistic talk of how the body would prise open new markets and act as the arbiter when disputes broke out between countries.

- Larry Elliott

The atmosphere today is much darker than it was in April 1994. Any enthusiasm for groundbreaking trade liberalisation deals disappeared decades ago and has been replaced by covert - and often overt - protectionism.

Relations between the US and China are at a low ebb, and likely to get worse. Late last month, China formally opened a WTO case against the US in which Beijing attempted to safeguard its electric vehicle industry, saying Joe Biden's subsidies to promote green manufacturing in America broke global trade rules.

The dispute over Biden's Inflation Reduction Act (IRA) highlights three trends: an ebb tide for globalisation, the increasingly difficult relationship between the world's two biggest economies, and the dysfunctional state of the WTO itself.

There is scant hope that China's case against the US will ever be resolved, because the WTO can no longer settle disputes. Any country on the wrong side of a WTO ruling has the right to go to appeal, but the appellate body needs judges to operate and since late 2019 the US has been blocking any new appointments to the panel.