The World Trade Organization and Erosion of Institutional Authority from a Realist Perspective

Abstract

The World Trade Organization (WTO) was established to provide a stable, rules-based framework for international trade, ensuring predictability, transparency, and the peaceful resolution of trade disputes among its members. However, in recent years, the WTO has experienced a significant erosion of institutional authority, most notably reflected in the paralysis of its Appellate Body and the increasing resort to unilateral trade measures by major powers. This study critically examined the extent to which the contemporary weakening of the WTO is better explained by the reassertion of great power politics rather than by internal institutional or procedural deficiencies. Anchored in realist theory, the analysis emphasized the primacy of state power, strategic interests, and shifting power asymmetries within the global political economy. The paper argued that the erosion of the WTO’s authority is fundamentally driven by the strategic behavior of dominant trading states, particularly as emerging powers challenge established economic hierarchies. As major economies prioritize national interests and geopolitical competition over multilateral commitments, compliance with WTO rules became increasingly selective. The dispute settlement mechanism, once the cornerstone of the organization’s credibility, has been constrained by great power resistance, limiting the WTO’s ability to enforce compliance effectively. This reflects a broader pattern consistent with realist expectations that international institutions function only insofar as they align with the interests of powerful states. Furthermore, the study demonstrated how strategic rivalries and asymmetric power relations undermine the WTO’s enforcement capacity, marginalizing smaller and developing economies that relied heavily on multilateral dispute resolution mechanisms. Rather than signaling institutional failure, the WTO’s current challenges highlighted the limits of liberal institutionalism in a system dominated by power politics. The paper concluded that while institutional reform alone cannot override great power interests, restoring the functionality of the Appellate Body is a critical step toward reasserting the WTO’s authority. Strengthening dispute settlement would constrain unilateralism, enhance predictability, and partially rebalance power within the multilateral trading system. Ultimately, the future effectiveness of the WTO depended on reconciling institutional rules with the realities of contemporary great power competition.