Brussels – Moving forward without the United States. Faced with the stars and stripes’ change of heart, the only possible alternative is to reform the World Trade Organisation (WTO) to adapt it to changing times. This is the solution proposed by the President of the European Central Bank, Christine Lagarde, to avert the worst amid a world order thrown into disarray by the United States under Donald Trump.
“Both law and money are institutional systems built on trust backed by authority,” and it is “alarming when trust between nations begins to erode,” Lagarde said, speaking at Columbia Law School in New York. “We are told that the old rules no longer apply, and that they were in any case merely a fig leaf.” Faced with all this, Lagarde notes that “the new world order is not new: it is a return to older patterns of coercion and mercantilism.” But beware, the ECB president said: “It is not the world: most countries do not want it and did not choose it. And it is not an order: it is the absence of one.”
This is a direct attack on the Trump administration. If there is turmoil today, it is because “the United States, which had underwritten the system for decades, began to lose faith that the rules were working in its favour. And once the guarantor of an order starts to doubt it, the order is in trouble.”
Tariffs are useless; reform the WTO to build new trust
Trump’s plan cannot work, Lagarde cuts short. The world is now globalised, interconnected, and “when interdependence remains, but trust has eroded, unilateral actions can quickly trigger retaliation and countries can end up in an equilibrium that nobody wants.” An example of this? The International Monetary Fund estimates that severe trade fragmentation could reduce global output by up to 7 per cent of GDP. “Add technological decoupling, and losses in some countries could reach 12 per cent.”
Continuing in this manner is not beneficial. Looking back at history, “the balance of power held for a century, until it didn’t. And when it broke down, the result was the most devastating wars in human history.” That is why, for Lagarde, a second model is preferable, “harder but more durable: to rebuild trust in the system by reforming it.” Translated: updating the WTO. Next month, ministers will meet in Cameroon (26-29 March) to discuss the future of the World Trade Organisation, an opportunity not to be missed for the President of the European Central Bank. “Reform must address fairness: it is increasingly untenable that a country such as China claims exemptions designed for much poorer countries.” Lagarde has no doubts: “A reformed WTO would help prevent trade disputes from escalating into something worse.”
New rumours of Lagarde’s resignation
The ECB president outlined a detailed agenda, but it is unclear to what extent she will be present and active in this process. Rumours of her early departure are circulating. Lagarde’s term expires at the end of October 2027, but some would like her to run for the French presidency or to become head of government under President Macron. Rumors she has consistently dismissed for over six months. Of course, stepping down early would mean leaving the appointment of her successor to the current leaders, particularly those of France and Germany, countries that will hold elections in 2027 before Lagarde’s term expires. Doing so would ensure that the choice is made by leaders who are more pro‑Europe than others. She deflects and denies it. And meanwhile, staying within the logic of her role, she calls on policymakers to reform the WTO.
English version by the Translation Service of Withub
