Lord Lamont of Lerwick
To ask His Majesty’s Government what proposals they have for increasing the effectiveness of the World Trade Organization.
The Parliamentary Under-Secretary of State, Department for Business, Innovation, Science and Trade (Lord Leong) (Lab)
My Lords, the WTO has failed to keep pace with trading realities and must reform. The UK has communicated our vision for a WTO that is more relevant, flexible and accessible. We are actively shaping the reform debate. Our proposals include ideas to stimulate discussion on how to level the playing field in trade, such as improved transparency and discipline on harmful trading practices, and to advance more flexible arrangements among subsets of members to make the WTO more responsive.
Lord Lamont of Lerwick (Con)
My Lords, I thank the Minister for that full and interesting reply. The WTO has been partially paralysed by disputes between China and the United States and by the United States withdrawing from part of its workings. Can the Minister tell the House whether the interim workaround measures, which were led by Canada and Australia and in which we participated, have helped to offset the effect of America’s withdrawal from the institution? Despite what the Minister said about transparency, will he confirm that, if we want to have growth in this country, in a world in which supply chains are politicised and there are tariff wars, it is extremely important that we do everything in our power to support a rules-based trading system?
Lord Leong (Lab)
I agree with the noble Lord that we have to abide by the rules-based trading system. As he knows, Canada, Australia and the United Kingdom are among the members using the WTO’s interim appeals arrangement, which currently has 61 members. It allows participating countries to resolve disputes without an appeal disappearing into the void while the appellate body remains paralysed. We continue to press for a functioning dispute settlement system that is accessible to every WTO member country, whether big or small, advanced or developing.
Lord Fox (LD)
My Lords, the noble Lord is right to emphasise the importance of a rules-based trading system and multilateralism. Although the WTO is stalled at the moment, there has been progress with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. As of Tuesday 1 September, UK businesses had full access to the CPTPP bloc. Can the Minister tell us what his department is doing to help British business, particularly SMEs, take advantage of this opportunity?
Lord Leong (Lab)
My Lords, the noble Lord makes a good point about trade agreements that we have signed with various countries, such as the CPTPP and the India free trade deal. Through our current dialogue, whether with the EU or the CPTPP, we are building support among members to reform the WTO. As Minister for Small Business and Enterprise, I speak to trade organisations and small businesses up and down the country and encourage them to take advantage of all the free trade agreements that we have. Governments can sign trade agreements with every other country, but it is meaningless if businesses do not take advantage of them. My ministerial colleagues and I are constantly reminding businesses to take advantage of the opportunities that we have created with these free trade agreements.
Lord Hannay of Chiswick (CB)
My Lords, last week the US electorate spoke negatively about President Trump’s erratic, chaotic and damaging tariff policy. Does this not now provide a real opportunity for the United Kingdom to help, with other nations, to put the WTO back at the centre of a rules-based trade order, where it should be?
Lord Leong (Lab)
My Lords, the United States’ actions have exposed serious structural weaknesses, particularly in dispute settlement, but abandoning the WTO would leave British businesses more vulnerable to arbitrary tariffs and economic pressure. For example, UK trade with non-FTA partners based on most favoured nation terms was something like £605 billion in 2025. So the WTO’s rules still underpin most global trade, and 72% of global trade operated under MFN terms at the end of February. We must engage with the United States in pressing it for reform and work with partners on practical agreements and interim arbitration.
Lord Spellar (Lab)
My Lords, is not the fundamental point that China was allowed into the WTO and then was allowed to relentlessly break its rules, trading unfairly with huge damage to our industrial manufacturing right the way across the West, with great social and political consequences? What assurances can the Minister give me that, in maintaining and improving the WTO, we will toughen up our approach so that we can properly trade with China on a level playing field to the mutual benefit of international trade?
Lord Leong (Lab)
My Lords, I totally agree with my noble friend. British businesses must be able to compete fairly, and our trade strategy calls for stronger action on subsidies that distort markets and create excess capacity. As major economies, we share the same responsibility as China to support the global trading system. Our bilateral discussions on WTO reform are focused on making the WTO more relevant, flexible and accessible. At senior official level between the UK and China, the WTO working group took place earlier this year in Beijing, covering a level playing field, development and reform issues. Together we have a common agenda to make sure that the WTO functions and works for everybody.
Lord Redwood (Con)
Will the noble Lord rule out imposing tariffs on new products and higher tariffs on them, other than anti-dumping tariffs, which are legal under WTO rules?
Lord Leong (Lab)
The noble Lord knows that we have to reform the WTO. As it currently stands, the dispute settlement is not functioning. It has been more or less paralysed since 2019, when the US refused to appoint any judges to its panel. Until such time that we get the dispute settlement resolved, we have the MPIA, which is the system that the noble Lord, Lord Lamont, mentioned. We are still coming together to try to get some resolution to where there is excess subsidy or dumping of cheap goods in this country. We need to resolve this through the system that we currently have.
Lord Anderson of Swansea (Lab)
My Lords, the consensus rule acts as a brake on positive developments. Do countries have to circumvent that to make progress? Is there any prospect of modifying it?
Lord Leong (Lab)
The noble Lord probably knows better than I do that it is quite difficult to get one consensus from 166 members. That is why consensus has broken down.
The Earl of Effingham (Con)
My Lords, seven leading members of the WTO have challenged the Government’s steel curbs, which cut tariff-free quotas and imposed 50% tariffs. Separately, the House of Lords International Agreements Committee, chaired by the noble and learned Lord, Lord Goldsmith, from the Government Benches, wrote that the UK-US economic prosperity deal was
“not consistent with WTO rules”.
How can this Government credibly claim to champion rules-based trade when the evidence suggests the opposite?
Lord Leong (Lab)
Our US economic prosperity deal is a landmark deal with the US that supports our key British businesses that employ thousands, if not millions, of people. If the noble Earl does not welcome that, perhaps he can tell us what deal he wants with the US.
Baroness Bennett of Manor Castle (GP)
My Lords, the current WTO framework is seen by many as grossly preferential to the largest and richest nations. Least developed countries account for only about 1.1% of global exports, far below the 2.2% target set for 2030 under the Doha programme. Will the Government work with the global South to support its interest, which is, of course, in the interest of the security of us all?
Lord Leong (Lab)
Yes, of course the Government will work with the global South, and any other countries for that matter, to resolve the current stalemate in the WTO. The dispute settlement appellate court is dysfunctional and not working, but meanwhile we have plurilateral, multilateral and bilateral arrangements with various members. There are 61 members in the MPIA, and we are working with them to resolve whatever disputes we currently have among members. We have to find a way to resolve the dispute settlement. Until and unless we find that, we have to carry on with these plurilateral arrangements.