The story

The World Trade Organization said Tuesday in its annual report that the global trading system is at a critical juncture and urged members to reform trade rules or risk fragmentation. WTO economists modeled scenarios showing that if the world fragments into competing geopolitical blocs, global GDP would be 5.1% lower and exports 18.6% lower by 2050 than otherwise. In a more severe scenario where multilateral cooperation collapses and is replaced by a patchwork of free trade agreements, global GDP would fall 6.9% and exports nearly 27%.

By contrast, enhanced multilateral cooperation could raise global GDP by 2.9% and boost exports by almost 18% by 2050, according to the report. Least developed countries would gain the most from stronger cooperation but could also suffer the largest losses from fragmentation. WTO Chief Economist Rob Staiger said the cost of inaction on reform would be up to 10% of global GDP.

The warning comes after the WTO's 166 members failed to reach agreement on a reform package at a ministerial meeting in Yaounde, Cameroon, in March. The Geneva-based organization said 72% of world trade in goods is still taking place on terms compatible with its non-discriminatory rules, down from 80%. Despite higher tariffs and uncertainty, trade flows grew rapidly in 2025 and the first half of this year, boosted by the AI investment boom.