At a time when trading policies and geographic alliances are being redrawn, Global Insight explores the future for multilateral groupings such as the G7, the WTO and NATO.

When the transnational military alliance NATO was established in 1949, it was in direct response to a perceived security threat from the Soviet Union and fears over the spread of communism.

Now, over 75 years on, the solidarity behind NATO looks flimsy and robust in equal measure. It has been strengthened by its resolve to stand up to Russian aggression in Ukraine but also weakened by questions over whether the US will commit to NATO’s collective defence principle.

US President Donald Trump has made ambiguous comments about the interpretation of Article 5 of the North Atlantic Treaty, which states that an attack against one NATO member state is considered an attack against all. But his equivocation has caused European NATO members to unify in committing to increased defence spending. Harmony and discord are standing side by side.

For other multilateral institutions such as the World Trade Organization and the UN, the ‘Trump effect’ is clearly disruptive. America’s imposition of sweeping tariffs and negotiation of new trade agreements goes against established transnational rules and conventions. ‘America First’ policies put forward by the Trump administration have the potential to weaken and splinter traditional cross-border alliances, although new partnerships are being forged in the form of bilateral trade agreements and regional coalitions.

Some now see the UN, the G7 and the WTO as having dwindling influence and relevance as member nations begin to assert their own interests at the expense of international accords. Meanwhile, the BRICS group, which originally consisted of Brazil, Russia, India, China and South Africa and has now expanded to contain ten members, has demonstrated a willingness to provide a countermodel to the G7, as a forum to discuss and create joint proposals.

The Trump 2.0 era certainly brings disruption but there’s potential for new forms of unity, too. ‘I suspect that this will be a period of time where the world adjusts to a new reality, where new agreements are reached and everybody’s just going to have to get acclimated to the current atmosphere and continue to survive and prosper under that new regime,’ says Michael Diaz, Global Managing Partner of Miami-headquartered firm Diaz, Reus & Targ.

The WTO’s ‘critical juncture’

Founded in 1995, the relevance of the WTO has come under particular threat due to President Trump’s tariff war and flouting of the organisation’s rules. Emerging from the General Agreement on Tariffs and Trade (GATT), the WTO’s mission is to create smoother and freer trade flows, while raising living standards around the globe. The US, though, has voiced frustrations with the WTO for decades, particularly its dispute settlement system and its perceived inability to address trade imbalances and the use of state subsidies by China, which obtained WTO membership in 2001. The WTO itself has had difficulty in imposing trade rules.

‘The WTO is facing its most critical juncture to date. Its dispute settlement mechanism remains incapacitated, and its capacity to facilitate new multilateral agreements has significantly diminished,’ says Carol Monteiro de Carvalho, Member of the IBA International Trade and Customs Law Committee Advisory Board.

Yves Melin, Co-Chair of the IBA International Trade and Customs Law Committee, believes the WTO is one of many multilateral institutions that now lack authority but still offer a forum for dialogue. ‘We’ve entered a new era, where a number of international organisations have become talking shops. It’s perhaps where people can diffuse tension and reach agreements at a bilateral level,’ he says. ‘The WTO is going to be more like the GATT, where people talk about issues, where diplomats talk to each other.’

Frustrations with the WTO have escalated since China’s admission. As the world’s largest non-market economy, its policies are out of step with Western nations and are widely alleged to conflict with WTO rules, given the country’s commitment to state subsidies and preserving its large state-owned enterprises. China’s typical response to such allegations is that it fully intends to comply with and uphold WTO rules and processes. Overall, China’s relationship with the WTO is complex. And with China’s significant population and need to maintain high employment levels and boost its sluggish economy, this relationship probably won’t change.

‘It’s not because China broke [the WTO] or intended to break it. It’s rather because after 2001, there existed another significant pole within the WTO that was pushing for things that were rather different than either what the US wanted or what Europe wanted or Japan or several other countries wanted,’ says Hurst.

Renê Medrado, Co-Chair of the IBA International Trade and Customs Law Committee, believes that China’s entry into the WTO was about ‘domesticating the tiger’, with the view being that opening China’s markets under WTO rules would be an effective instrument to achieve that goal. This didn’t come to pass, however.

Worldwide free trade – incorporating the Chinese market – was an admirable ambition and the WTO’s mission has resulted in many developing economies being lifted out of poverty, but consensus has been a rare commodity in the past few decades.

Struggling for influence

The UN – which came into existence in 1945 – has been hampered in recent times by diminishing support from the US, which has withdrawn its membership of specific UN bodies such as the Human Rights Council and the World Health Organization. The US has also retreated from the Paris Agreement on the climate crisis, which was adopted in 2015 at the UN Climate Change Conference, COP21.

The UN’s ability to address critical global issues is complicated due to the composition of its Security Council, with five permanent members – China, France, Russia, the UK and the US – all wielding the power to veto resolutions. Hurst says that the UN has always struggled to make significant determinations, pointing to the resolution allowing a US-led coalition to take military action in Korea in the 1950s only going ahead because the Soviet Union had walked out of the talks. ‘Had the Soviet ambassador to the UN […] not walked out, that resolution wouldn’t have happened,’ he says.

More recently, the US has vetoed the UN Security Council’s resolution demanding a permanent ceasefire in Gaza. In February, the US voted alongside Russia and North Korea against a resolution condemning Russian aggression in Ukraine and supporting Ukraine's territorial integrity. Though a part of the traditional Western partnership, on some occasions the US now takes alternative positions to many of its allies.

Divisions within the G7, the intergovernmental political and economic forum, have become more apparent during the two Donald Trump presidencies of 2017–2021 and 2025 onwards. The group routinely fails to issue meaningful communiques at the end of key summits. At the G7 talks in Kananaskis, Canada, in June, an agreement was reached on a global minimum tax, even though President Trump departed the summit a day early.

Martin Biesel, World Order and Globalization Hub Expert in Foreign Policy and Economics at the Friedrich Naumann Foundation in Washington, DC, says that the G7 started out as a forum for private dialogue and it will probably have to return to its roots. ‘It seems to not be working any more, and it might have to return to the kind of private open talks that it was originally intended to be for,’ he says.

Even though these institutions are struggling for influence, their presence is still important, particularly as a means of addressing trade and security tensions. Diaz believes that multilateral institutions still have an important role, despite current tensions over US trade policy. ‘To say that the WTO, the G7 and others have been eviscerated is incorrect. To say that they mean nothing is incorrect because the US still has to trade with its partners,’ he explains.

Renewed unity

The notion of need is increasingly apparent. Despite recent internal strains, some multilateral institutions and supranational organisations have been brought closer together. The security threat from Russia and the Trump administration’s imposition of America First policies have created greater cohesion within NATO and the EU as they seek to assert their interests with less reliance on the economic and military might of the US.

Through the Hague Summit Declaration in June, NATO members committed to annually spending 3.5 per cent of gross domestic product on defence and 1.5 per cent of GDP on defence and security-related expenditure by 2035, though Spain has opted out. The declaration comes after many years of pressure from President Trump, who has demanded that other NATO members pay more towards defence. The five per cent pledge shows more unity within NATO but comes at a time when Europe perceives a greater security threat from Russian aggression and is anxious about military support from the US. In June, Trump worried allies when he said that ‘there’s numerous definitions’ of Article 5 of the North Atlantic Treaty – the NATO collective defence provision.

Under the five per cent of GDP commitment, defence spending in Europe is expected to rapidly escalate. Defence giants such as BAE Systems have seen their share prices rocket upwards in 2025.

The EU has the second largest economy in the world in nominal terms and third largest by purchasing power parity. Now with its commitment to defence spending, it can position itself more emphatically.

Melin, who’s also a partner at Cassidy Levy Kent in Brussels, believes that the EU’s dedication to building up renewable and nuclear energy capacity, meaning it’ll be powered solely by carbon-free energy sources in ten to 20 years’ time, is vital for its global status. It’ll no longer be energy-dependent on Russia, the Middle East and the US. Projecting greater influence, it’s notable too that the UK is now working hard to reconnect with the EU after voting to leave its membership in 2016. ‘We are entering a multipolar world where the US is very powerful and where other powers are rising,’ says Melin. ‘I feel that Europe, and the EU in particular, has an opportunity to really gain influence globally.’

China exerts its power

In this multipolar system, China also has a chance to build authority as the US withdraws soft power, pauses overseas aid and takes a step back from military interventions, save for its recent bombing of Iranian nuclear facilities. The America First plan adopted by the US, which has in turn caused fragmentation of historical coalitions and partnerships, provides a vacuum for China to move into.

For some years, China has used its Belt and Road Initiative, its Global Security Initiative and its Global Development Initiative to build influence around the world, while the US has become more inward looking. China has recognised that spreading dissatisfaction with many multilateral institutions gives it an opportunity to advance its own political goals, says Biesel.

Hurst has witnessed a secular shift in China’s foreign policies over the years, especially its engagement with multilateral organisations. ‘China went from being essentially a breaker and underminer of global institutions in the 1950s, 60s and 70s to then adopting this role of a taker and just accepting all of the rules of the institutions as it was trying to work within them to advance its own interests as best as possible,’ he says. ‘Since the 2000s […] and particularly since the financial crisis of 2008, China has been seeking to step into the role of maker, to get a seat at the table and begin to shift the rules, at least a little bit.’

China believes that the position of the US as the world’s leading superpower is temporary and expects a multipolar world to emerge. In this new world, China would be a principal power itself. ‘China [has] always said the American century was just an exception in the last 2,000 years of world history and that China itself is now going back to its natural lead,’ says Biesel.

Though it has clearly built some authority on the global stage and within multilateral institutions, China’s growing influence is hindered by its own economic problems and configurations. ‘China’s economy is not growing very well,’ Hurst says. ‘It has all kinds of internal political difficulties and it has some other basic structural problems. It’s very difficult for it to support transnational or supranational regulation, because of its own constitutional system and also because of its baseline positions.’

China’s ability to challenge the US in the multilateral environment and on the global stage is also impeded by currency trading restrictions. Strict rules mean that money can’t freely move in and out of the country. China’s official currency, the renminbi, is unable to challenge the US dollar for cross-border trade and capital flows.

Moreover, Hurst believes that a significant number of countries are nervous about relations with China, especially as many developing nations have essentially ceded sovereignty to the world’s second largest economy. Numerous states have accepted large-scale infrastructure investment from China, potentially leading to debt repayment crises.

Alternative alliances

China remains at the heart of the BRICS, often described as a countermodel to the G7. The term ‘BRICS’ stems from an acronym conceived by a Goldman Sachs economist in 2001 to categorise countries experiencing rapid economic growth and poised to become major forces on the global stage.

Brazil, China, India and Russia began to meet informally in 2006, with South Africa joining the group in 2010, thereby making the collective ‘BRICS’. The BRICS group has since expanded to become ‘BRICS+’, with the addition of Egypt, Ethiopia, Iran and the United Arab Emirates in 2024, and Indonesia joining in 2025. As a G7 alternative, it has sought to promote a more multipolar world, in which developing nations would have a greater voice. It has floated ideas such as an alternative global reserve currency to the US dollar as well as BRICS Pay, a decentralised payment mechanism within BRICS+ nations.

‘There is growing interest in diversifying away from the US dollar, particularly among countries seeking to insulate themselves from US-driven sanctions and monetary policy,’ says Monteiro de Carvalho, who’s also a partner at Monteiro e Weiss Trade in Rio de Janeiro. ‘Initiatives such as BRICS Pay and expanded use of local currencies in bilateral trade are steps in that direction.’

She adds however that fully replacing the dollar is a long-term and complex endeavour. ‘[The cryptocurrency] Bitcoin, for its part, remains hindered by high volatility and regulatory resistance,’ says Monteiro de Carvalho. She believes that in the short to medium term, we’ll probably see currency diversification rather than wholesale substitution.

Although fragmentation in the West may have emboldened BRICS+, the group has its own solidarity challenges. China and Russia have been brought closer together as they navigate their own economic and geopolitical struggles, but other members have only moderate links. Brazil and South Africa have minimal trade, while India and China have historical border tensions. The latter two countries do have growing economic ties, however, with China becoming India’s second largest trading partner after the US.

‘The BRICS are very heterogeneous, so finding common ground between these countries is not easy,’ says Medrado, who’s also a partner at Brazilian law firm Pinheiro Neto Advogados. Russia’s invasion of Ukraine inevitably creates additional tension within the group, but the addition of five new members in 2024 demonstrates that BRICS+ has a future.

Beyond BRICS+, there are other alliances emerging. China, Japan and South Korea are discussing new free trade ties because of America’s latest tariff policies. It heralds a potential era of new bilateral deals and smaller-scale multilateral agreements as the world comes to terms with the geopolitical and cross-border trade shake-up caused by the second Trump presidency.

Vázquez sees a much larger role for regional alliances. ‘If you take MIKTA [the partnership between Mexico, Indonesia, South Korea, Turkey and Australia] and the BRICS countries, they are so far away from each other that they don’t really have this shared, common interest,’ he says. ‘Perhaps we [will] see more regionalism, where countries are close or share borders.’

This more regional approach is illustrated by the UK’s desire to broker closer trade links with the EU, in areas such as fishing rights, farming exports and security and defence. It has also led to a US–UK tariff deal, giving the latter’s car manufacturers greater access to the American market, while providing reduced tariffs to other key industries in return for reciprocal access to US importers.

‘We are witnessing a profound reconfiguration of geographic alliances and trade patterns, which is having direct implications [for] global supply chains,’ says Monteiro de Carvalho. ‘The global trade environment has grown increasingly complex, with a heightened role for government-led negotiations.’

At the heart of fragmented alliances in the West are political swings towards nationalism, protectionism and populism. Solidarity with neighbours and historical allies could be portrayed as weakness or against national interests.

Established multilateral institutions such as the UN and WTO may have seen their influence gradually slipping away, but they still play a vital role in promoting dialogue. Their roles may change and new multilateral groupings may emerge, as nations recognise the value of solidarity.

As countries retreat from globalisation, it’s natural that international alliances will suffer. Yet, with geopolitical volatility and security threats increasing by the day, and with the US appearing to be less interventionist from a military perspective, nations are being forced to reconsider the importance of collective power.

Chris Crowe is a freelance journalist and can be contacted at chris@crowemedia.co.uk

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