World Trade Report 2026

The multilateral trading system is at a critical juncture. Over eight decades, it has provided comprehensive rules for trade in goods, services and intellectual property, and has delivered substantial value – in terms of reducing trade barriers, providing a predictable trade environment and supporting an almost fifty-fold expansion in global trade, growth and better living standards – but these gains have not been shared evenly, and some economies, workers and communities have benefitted more than others.

By creating a more open and integrated world economy, where trade policy has become increasingly important, the multilateral trading system has also created an environment where trade frictions have become more complex, WTO membership has become more diverse and economic power has been more widely distributed. Shifts in economic power, differences in economic systems, growing government interventions, the ubiquity of global value chains, the rising importance of digitalization and artificial intelligence, environmental challenges and geopolitical tensions are testing rules designed in an earlier era. The principle of non-discrimination among trading partners, reciprocity, tariff commitments, transparency about trade measures, dispute settlement and flexibilities for developing economies remain central to trade cooperation, but they are increasingly under strain.

Nevertheless, the WTO’s purpose is more relevant today than ever. The challenge now is not to preserve the status quo, but to adapt rules-based cooperation to a more integrated, multipolar and diverse global economy, so that the foundations of an open global trading system are strengthened, and the benefits of trade are shared by all.

The current multilateral trading system was formally established after the Second World War, but its legal, economic and political roots extend much further back.

Many of its core principles – notably reciprocity, non-discrimination and rules-based cooperation – can be traced to the dense network of bilateral trade treaties that emerged in Europe during the second half of the 19th century. In this sense, the post-war trading system was an evolutionary development, building on earlier structures and practices while adapting them to new circumstances.

Yet the immediate impetus for creating a multilateral trading system was not the success of 19th-century globalization, but its collapse. Between 1914 and 1945, war, depression, protectionism and economic fragmentation reversed decades of growing integration and cooperation, interrupting the first age of globalization with a prolonged period of deglobalization.

The architects of the post-war order sought not only to restore an open world economy, but also to address the institutional weaknesses that had contributed to its breakdown, helping to usher in a new era of re-globalization.

Understanding how the system emerged from this, and how it has adapted to successive periods of expansion, crisis and reform, is essential for understanding the challenges it faces today.

Key points

• The core principles of the multilateral trading system – reciprocity, non-discrimination and rules-based cooperation – were developed over more than a century, beginning with a network of European treaties in the 19th century, which were progressively refined through successive generations of agreements.
• The post-Second World War multilateral trading system was designed in direct response to certain systemic failures in the period between the two world wars and during the Great Depression of 1929-39. The experiences of protectionism, discriminatory trade blocs, monetary instability, weak institutions and a leadership vacuum convinced policymakers that an open global economy required stronger rules and international institutions.
• The success of the General Agreement on Tariffs and Trade (GATT) and WTO transformed the challenges they were created to address. As trade has expanded, GATT and then WTO membership has broadened, economic integration has deepened, trade negotiations have become more complex and domestic policies have become more central to trade relations. However, managing cooperation among increasingly diverse economies has also become more demanding.
• Just as trade, investment and productivity growth once reinforced one another in a virtuous circle, weaker growth since the 2008-09 global financial crisis and the slowdown in trade integration risk creating a vicious circle in which slower growth, rising protectionism and stalled trade reform become mutually reinforcing. Breaking that cycle may require a renewed trade cooperation agenda and institutional reform capable of generating stronger, more inclusive and more resilient global growth.

This chapter explores the value of the multilateral trading system.

First, it reviews what the system has delivered – such as contributing to lower trade barriers and enabling wider participation in world trade – while recognizing that benefits have been distributed unevenly.

Second, it explains how the system delivered these results, by helping to avoid “beggar-thy-neighbour” policies, enhancing the credibility of domestic commitments, fostering coordination and reducing trade policy uncertainty.

The chapter outlines the economic logic of reciprocal market access bargaining and the rules pertaining to those bargains, shows how successive rounds of negotiations led to deeper commitments, and explains the need for flexibilities.

Third, the chapter looks at the WTO’s institutional role and the value of its negotiating, transparency and monitoring, and dispute settlement functions.

Finally, the chapter assesses what would be at stake if WTO-based cooperation were allowed to erode.

Key points

• WTO membership has been a powerful driver of trade, growth and prosperity. By lowering trade barriers, increasing trade policy predictability and supporting domestic reform, the WTO has expanded trade, strengthened participation in global value chains, raised living standards and contributed to poverty reduction, economic resilience and sustainable development across the world economy.
• However, the gains from WTO membership have been unevenly distributed. Least-developed countries (LDCs) still account for less than 1 per cent of world trade, and the benefits of trade have been unevenly shared across workers, firms and regions. While domestic factors partly explain these disparities, barriers within the trading system – including non-tariff measures and a high concentration of trade within a core group of economies – also play a role.
• The WTO’s rules-based architecture, including the non-discrimination principle of most-favoured-nation treatment, reciprocity and binding commitments, make trade cooperation possible by balancing commitments with policy flexibility, helping to reduce the complexity of international trade relations.
• The WTO’s institutional functions beyond trade negotiations – the transparency of trade measures, monitoring trade policies, committee work and dispute settlement mechanisms – help WTO members to manage trade obstacles, improve regulatory cooperation and avoid unnecessary disputes.
• Weakened multilateral cooperation would impose significant economic costs, particularly on developing economies. New simulations by WTO economists suggest that the erosion of WTO-based cooperation could reduce global GDP by 5 to 10 per cent by 2050. If cooperation were replaced by an unstructured network of free trade agreements, LDCs could lose 16.5 per cent of GDP, more than three times the losses projected for high-income economies. Conversely, deeper multilateral cooperation could increase global GDP by 2.9 per cent, with relative gains of 7.7 per cent for LDCs. 

Over the past three decades, global trade has undergone significant structural shifts.

The distribution of global economic activity has shifted toward fast-growing emerging economies. The relevance of differences in economic systems and the extent of government interventions in markets have grown.

The expansion of global value chains (GVCs) has increased global economic interdependence, while digital transformation has altered what is traded and how it is traded, and climate change has underlined the role of trade in finding ways to adapt.

The WTO now operates in a multipolar, deeply integrated global economy in which interests are more diverse and strategic competition is more salient. As a result of these shifts, the WTO has come under strain.

This chapter examines major trends reshaping the global economy, the reasons why these are straining the multilateral trading system and the ways in which the system has tried to keep pace.

Key points

• Over eight decades, the multilateral trade cooperation embodied in the GATT and subsequently the WTO has successfully fostered a deeply integrated, multipolar global economy.
• The share of low and middle-income economies in global trade has nearly doubled, rising from 23 per cent in 1995 to 45 per cent in 2024. While this rapid change may have created a gap between members’ commitments and today’s economic realities, it also creates new opportunities.
• Governments’ economic interventions and their spillovers on trading partners have become more prominent in WTO discussions. New industrial strategies have led to an increasing use of subsidies, and this has brought level-playing-field questions to the fore in discussions of rules-based cooperation.
• The world economy has become far more deeply integrated since the Second World War. The greater complexity of global economic linkages has also increased the complexity of implementing trade policies. Meanwhile, global crises and geopolitical tensions in recent years have recast interdependence as a security issue.
• Since the mid-1990s, digital technologies have fundamentally reshaped international trade. The rapid emergence of artificial intelligence (AI) is amplifying this transformation, generating significant economic opportunities while at the same time creating new challenges.
• The importance and scope of environmental policy have changed dramatically since the WTO was established in 1995. A lack of coordination of environmental and trade policies risks reducing the potential of those policies to support the transition to a less carbon-intensive economy, and could create a negative impact on trading partners.