European Central Bank President Christine Lagarde calls for WTO and multilateral reforms to rebuild trust in the international order

The European Central Bank published an acceptance speech by President Christine Lagarde in which she argued that the international legal and economic order can be sustained through pragmatic reform rather than a return to coercion and mercantilism. She framed the post-war system as a rules-based architecture built by countries large and small, contended that incentives to cooperate remain strong despite eroding trust, and warned that legitimacy will depend on updating rules as the balance of economic power shifts. Lagarde pointed to persistent global interdependence, noting that almost half of trade remains embedded in global value chains and that cross-border financial positions are historically high, which limits the scope for rapid autonomy and raises the risk that unilateral actions trigger retaliation. She cited International Monetary Fund estimates that severe trade fragmentation could reduce global output by up to 7% of GDP, with losses in some countries reaching 12% when combined with technological decoupling. On the durability of the legal order, she highlighted continued reliance on international tribunals and Europe’s decision to immobilise, but not seize, Russia’s assets to avoid undermining legal principles governing sovereign assets. She presented World Trade Organization reform as a key channel, including addressing fairness concerns such as China claiming exemptions designed for much poorer countries and enabling smaller groups of members to deepen cooperation, alongside bilateral and regional agreements as complementary rule-making “laboratories”, with the number of such agreements rising to 375 last year. She noted that ministers will meet in Cameroon next month to discuss the future of the WTO.