6 minute read 14 Sep 2021
Detail scenic view of colorful houses in Provence village

Why UK businesses should care about rules-based trade and the WTO

By Sally Jones

EY UK Trade Strategy and Brexit Leader

Trade Strategy Partner. Helping companies and governments enhance trade. Mother of three. Astronomer.

6 minute read 14 Sep 2021

The World Trade Organization faces challenges, but it must remain a key body for international businesses’ long-term strategic planning.

In brief
  • 2021 is set to be a defining year for the WTO.
  • Multiple aspects of the WTO need to be urgently corrected but, despite these challenges, the WTO makes a positive contribution to global trade.
  • There are three ways in which UK businesses can incorporate the WTO into their trade strategy.

The World Trade Organization (WTO) has reached a critical point in its relatively short life. The organisation was set up in in 1995 to continue the work of the General Agreement on Tariffs and Trade (GATT), which had been established to prevent a repeat of the political and economic crises that contributed to the Second World War. As we cautiously emerge from the shock of the COVID-19 pandemic, this article explores why the case for supporting and engaging with the WTO’s aims and objectives remain as compelling as ever.

2021: a defining year

This year will go down as a particularly eventful and intense year for the WTO:

  • In March, the WTO saw a new Director-General appointed, Dr Ngozi Okonjo-Iwaela.
  • In June, it featured high on the agenda during the G7 Summit in Cornwall.
  • In November, the WTO will convene its first Ministerial Conference since 2017.

If a week in politics was a long time in a less turbulent age, then four years of relentless upheaval in the hyper-politicised world of international trade must surely feel like a lifetime. Whilst the level of change that we have lived through since 2017 may be unprecedented, many of the challenges facing the WTO have simply intensified during that period. 

These challenges are broad, deep and highly complex. They range from concerns over a lack of progress in its negotiating agenda and the need for more transparency through to the paralysis of the WTO’s dispute settlement function, which has been mired in disagreements over the role of its highest adjudicating authority, the Appellate Body. In fact, the US’ decision to keep blocking the appointment of members to this body means the WTO has been unable to perform one of its core functions – settling trade disputes between members. Finding a solution tops the list of priorities. Other priorities this year include concluding talks amongst WTO members to find agreement on eliminating harmful fisheries subsidies, a task they set themselves to conclude by 2015 as part of the United Nation’s Sustainable Development Goals

Addressing multiple challenges

Another priority involves modernising the WTO by bringing it up-to-date with the new realities that continue to transform the world economy – most notably digitisation, e-commerce and the virtual economy. Then there is the increasingly pressing need to rationalise domestic regulations covering the global trade in services, and the list goes on. 

As George Riddell, Trade Strategy Director, Ernst & Young LLP, emphasises: “The WTO urgently needs to start delivering concrete outcomes on issues that really matter to the global economy. Members need to find ways of moving forward past the failures of the past, even if it means only a smaller grouping of countries delivering positive results rather than the full membership.”

Acknowledging the positives

Although there is a consensus that key parts of the WTO urgently need fixing, it is equally important to acknowledge the many compelling reasons why businesses, especially in the UK, should still care about the WTO.

For a start, the WTO is the world’s largest and only truly global rules-based trading organisation, with 164 members that collectively represent over 96% of international trade and global gross domestic product (GDP). There is measurable evidence that these countries have made a positive difference to world trade through their membership. Individually, they have also netted significant benefits.

Ironically, perhaps, the two countries that are currently engaged in the fiercest trade disputes – the US and China – are the same countries that have gained most from being WTO members. A study, The WTO at 25: Assessing the Economic Value of the Rules-Based Global Trading System (pdf), commissioned by the German-based independent foundation, Bertelsmann Stifung, to mark the WTO’s 25th birthday in 2019, found that the US had gained around US$87bn as a direct result of being a WTO member whilst China had gained US$86bn. The study put the EU’s gains at US$232bn.

By helping to remove barriers to global trade and boost economic growth, the WTO has also made an important contribution towards alleviating poverty and uplifting communities in some of the world’s poorest countries.

A group of the WTO’s membership is attempting to push forward negotiations on topics such as e-commerce, domestic services regulation and improving the trading prospects for micro-, small- and medium-sized enterprises through the so-called Joint Statement Initiatives. A successful conclusion to these trade negotiations would mark a significant step forward for the WTO.

Overall, the countries that have prospered most from their membership are those with strong export and production capabilities. In a post-Brexit world, it is likely to be advantageous for the UK to engage with the WTO, especially because international trade is likely to play a major role in our post-pandemic recovery.

Towards a more prosperous, stable, equitable future

Businesses should keep the faith with the WTO’s noble aspirations: to help build a more prosperous, peaceful and accountable economic world by ensuring that trade flows as smoothly, predictably and freely as possible. The alternative is a world trade system that is weakened by intractable disputes, increasing friction and fragmentation, and protectionism.

Incorporating the WTO into the UK’s trade culture

UK businesses can make the WTO part of their long-term strategic planning in three ways:

1)   By building a detailed understanding of the WTO

To capitalise on the potentially rich trade opportunities that are opening up around the world, it is important that businesses make a comprehensive understanding of WTO trade rules and processes, a core part of their long-term trading strategies. This is because, in an increasingly globalised economy, it may well be the WTO that sets the rules on how countries do business with each other. Amongst other advantages, mastering these rules empowers businesses to shape the right responses to shifting global tariffs and trading relationships; reduce risks, costs and delays in their trade networks; optimise their supply chain operating models; and take full advantage of increasingly sophisticated and powerful digital technologies.

2)   By drawing on the WTO’s vast institutional knowledge

The WTO is a rich source of information that can help businesses to build a trade strategy that meets their objectives. There are numerous trade-databases filled with information ranging from the tariffs in a particular country through to lists of the most recent trade-related standards and regulations being implemented by WTO members. Having access to the right advice and support is critical to navigating the global trade landscape. UK businesses can actively draw on this expertise through the Department for International Trade and the UK’s diplomatic Mission in Geneva.

3)   By including the WTO when engaging governments

Experience shows that a well-informed business community can play a significant part in influencing their government’s position on trade issues. By including the WTO on the agenda when engaging the Government, UK businesses have a real opportunity to shape the way this country will trade with the world post-Brexit.


2021 marks a critical year in the WTO’s short history. Whilst the challenges it faces are not in doubt, there remain compelling and positive reasons for organisations to engage with it. Post-Brexit and during the COVID-19 pandemic recovery, the reasons for UK businesses to care about the WTO are particularly strong. Businesses should consider a three-step approach to including the WTO in their trade strategy.

About this article

By Sally Jones

EY UK Trade Strategy and Brexit Leader

Trade Strategy Partner. Helping companies and governments enhance trade. Mother of three. Astronomer.