The World Trade Organisation (WTO) has been drifting since the acrimonious collapse of its Seattle meeting in late 1999. Its members remain deeply divided, while continuing trade conflicts between the US and Europe are straining the body's disputes settlement procedures.

Prospects for the launch of a new trade round are blighted by the lack of a common agenda and by a grassroots reaction against globalisation that was noisily expressed on the streets of Seattle.

Meanwhile, disenchantment at stagnation in the WTO is spurring a resurgence of enthusiasm for bilateral trade pacts, notably in the Asian Pacific region, that could eventually weaken commitment to multilateral principles.

Against this background, the inauguration of a new US president, always a critical event in world trade policy, assumes particular importance. Many policymakers around the world are looking to the administration of George W. Bush for leadership.

Mr Bush is a self-proclaimed free trader. However, it is still unclear whether his first priority will be to try to reinvigorate the multilateral system or, as some suspect, to push for regional and bilateral agreements, particularly in the Americas.

It is also uncertain whether he will be any more successful in securing from an evenly-divided Congress the authority needed to press ahead with fresh liberalisation initiatives.

Economic conditions may further constrain his room for manoeuvre. A recession could unleash pressures for trade protection in the US, particularly if the dollar remains relatively strong.

That would threaten renewed conflicts with trade partners. The US is already locked in intractable disputes with the EU over issues including beef, bananas and the taxation of export income, and another big battle is looming over government aid to the European Airbus programme.

These disputes spring from more than just differences between rival producers. The end of the cold war has led to a shift in attitudes on both sides of the Atlantic, causing the US and EU to regard each other increasingly as competitors on global markets.

At the same time, the extension of trade policy beyond border barriers has brought to the fore complex and sensitive issues such as food safety and biotechnology products, which have created tensions between regulatory systems and cultural values.

Further escalation of transatlantic hostilities would not only increase pressure on the WTO, which has the unenviable task of adjudicating the often bitter disagreements between its two biggest members; it could also make much harder the task of forging common ground between the US and the EU on other issues.

The two remain far apart on the idea of launching a trade round, which the EU says is needed to keep the WTO moving forward. Under the Clinton administration, Washington was unenthusiastic about Brussels' insistence on wide-ranging negotiations on issues including competition, investment and the environment.

Like other big far exporters, the US suspects that the EU approach is intended to deflect pressure for liberalisation of agricultural trade by overloading the agenda with other, less-pressing issues.

While US-EU partnership has long been an essential condition of multilateral trade progress, it is far from the only one. Indeed, the changing composition of the WTO has in some ways lessened its relative importance.

Two developments have radically altered the political balance within the organisation, compared with the situation in the old General Agreement on Tariffs and Trade (Gatt). One is the rapid expansion of its membership, which now stands at 140, the overwhelming majority of which are developing countries.

The other is the change in the nature of their contractual relationship with the trade systems. In the Gatt, developing countries accepted a backseat role in return for being granted concessions over meeting commitments.

However, in the Uruguay Round, poor countries were brought aboard as fuller partners, agreeing to sign up to many of the reciprocal obligations undertaken by rich countries. That has given them a bigger say in the WTO's affairs, but has also led to friction and resentment.

Many developing countries complain they received few benefits from the Uruguay Round. They say they are struggling to implement onerous obligations in areas such as intellectual property rights, but have not enjoyed improved access to rich countries' markets for products such as textiles and agriculture.

Their discontent has encouraged them to resist the launch of a new trade round unless they are relieved of burden of meeting existing commitments. However, the US and EU are reluctant to accept all their demands, saying they amount to an attempt to renegotiate agreements.

The resulting stalemate is unlikely to be broken quickly. Furthermore, tensions within the WTO, and the difficulty of managing its affairs, may grow after China becomes a member, which is expected to happen this year.

China's leadership views entry both as a status symbol and as a powerful reinforcement of its drive for domestic economic reform and restructuring, which it hopes will intensify competition and strengthen confidence among foreign investors.

However, integrating the world's most populous nation presents huge challenges. It is unclear how successfully Beijing will be able to meet the obligations of WTO membership, given the difficulties of enforcing the rule of law domestically.

It is also uncertain how China will play its cards politically. Some developing countries hope it will act as a champion of their interests, against those of the WTO's rich members. But their enthusiasm is increasingly tinged with concern about fierce competition from China for export markets and foreign investment.

Mike Moore, WTO director-general, has said that managing China's admission is likely to be the biggest challenge the organisation will face this year. However, it looks like being far from the only one.