The World Trade Organization (WTO) is an
international organization designed by its founders
to supervise and liberalize international trade.
The organization officially commenced on January
1, 1995 under the Marrakech Agreement,
replacing the General Agreement on Tariffs and
Trade (GATT), which commenced in 1947.
The World Trade Organization (WTO) is the global
international organization dealing with the rules of
trade between nations.
At its heart are the WTO agreements, negotiated
and signed by the bulk of the world’s trading
nations and ratified in their parliaments.
The WTO's predecessor, the General Agreement on
Tariffs and Trade (GATT), was established after
World War II in the wake of other new multilateral
institutions dedicated to international economic
cooperation - notably the Bretton Woods institutions
known as the World Bank and the International
It oversees the implementation, administration and operation
of the covered agreements.
It provides a forum for negotiations and for settling disputes.
Additionally, it is the WTO's duty to review and propagate the
national trade policies, and to ensure the coherence and
transparency of trade policies through surveillance in global
Another priority of the WTO is the assistance of developing,
least-developed and low-income countries in transition to
adjust to WTO rules and disciplines through technical
cooperation and training.[
The WTO is also a center of economic research and analysis:
regular assessments of the global trade picture in its annual
publications and research reports on specific topics are
produced by the organization.
Finally, the WTO cooperates closely with the two other
components of the Bretton Woods system, the IMF and the
A comparable international institution for trade, named
the International Trade Organization was successfully
The ITO was to be a United Nations specialized agency
and would address not only trade barriers but other issues
indirectly related to trade, including employment,
investment, restrictive business practices, and commodity
But the ITO treaty was not approved by the United States
and a few other signatories and never went into effect.
In the absence of an international organization for
trade, the GATT would over the years "transform
itself" into a de facto international organization.
The GATT was the only multilateral instrument
governing international trade from 1948 until the
WTO was established in 1995.
Seven rounds of negotiations occurred under the
GATT. The first GATT trade rounds concentrated on
further reducing tariffs.
Then, the Kennedy Round in the mid-sixties brought
about a GATT anti-dumping Agreement and a section
The Tokyo Round during the seventies was the first
major attempt to tackle trade barriers that do not take
the form of tariffs, and to improve the system,
adopting a series of agreements on non-tariff barriers,
which in some cases interpreted existing GATT rules,
and in others broke entirely new ground.
The eighth GATT round — known as the Uruguay
Round — was launched in September 1986, in Punta
del Este, Uruguay.
It was the biggest negotiating mandate on trade ever
agreed: the talks were going to extend the trading
system into several new areas, notably trade in
services and intellectual property, and to reform trade
in the sensitive sectors of agriculture and textiles; all
the original GATT articles were up for review.
The WTO’s overriding objective is to help trade flow
smoothly, freely, fairly and predictably.
It does this by:
Administering trade agreements
Acting as a forum for trade negotiations
Settling trade disputes
Reviewing national trade policies
Assisting developing countries in trade policy issues, through
technical assistance and training programmes
Cooperating with other international organizations
The WTO has 157 members, accounting for over 97% of world trade.
Decisions are made by the entire membership.
This is typically by consensus. A majority vote is also possible but it has
never been used in the WTO, and was extremely rare under the WTO’s
The WTO’s agreements have been ratified in all members’ parliaments.
The WTO’s top level decision-making body is the Ministerial Conference
which meets at least once every two years.
Below this is the General Council (normally ambassadors and heads of
delegation in Geneva, but sometimes officials sent from members’ capitals)
which meets several times a year in the Geneva headquarters.
The General Council also meets as the Trade Policy Review Body and the
Dispute Settlement Body.
At the next level, the Goods Council, Services Council and Intellectual
Property (TRIPS) Council report to the General Council.
Numerous specialized committees, working groups and working parties
deal with the individual agreements and other areas such as the environment,
development, membership applications and regional trade agreements.
The WTO Secretariat, based in Geneva, has
around 639 staff and is headed by a directorgeneral.
Its annual budget is roughly 197 million Swiss
It does not have branch offices outside Geneva.
Since decisions are taken by the members
themselves, the Secretariat does not have the
decision-making role that other international
bureaucracies are given.
The Secretariat’s main duties are to supply
technical support for the various councils and
committees and the ministerial conferences, to
provide technical assistance for developing
countries, to analyze world trade, and to explain
WTO affairs to the public and media.
The Secretariat also provides some forms of legal
assistance in the dispute settlement process and
advises governments wishing to become
members of the WTO.
Five principles are of particular importance in understanding
both the pre-1994 GATT and the WTO.
It has two major components: the most favoured nation
(MFN) rule, and the national treatment policy.
The MFN rule requires that a WTO member must apply the
same conditions on all trade with other WTO members.
National treatment means that imported goods should be
treated no less favorably than domestically-produced goods
(at least after the foreign goods have entered the market)
and was introduced to tackle non-tariff barriers to trade (e.g.
technical standards, security standards et al. discriminating
against imported goods).
Reciprocity. It reflects both a desire to limit the scope
of free-riding that may arise because of the MFN rule,
and a desire to obtain better access to foreign markets.
Binding and enforceable commitments . The tariff
commitments made by WTO members in a multilateral
trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules
establish "ceiling bindings": a country can change its
bindings, but only after negotiating with its trading
partners, which could mean compensating them for loss
of trade. If satisfaction is not obtained, the complaining
country may invoke the WTO dispute settlement
Transparency. The WTO members are
required to publish their trade regulations, to
maintain institutions allowing for the review of
administrative decisions affecting trade, to
respond to requests for information by other
members, and to notify changes in trade
policies to the WTO.
Safety valves. In specific circumstances,
governments are able to restrict trade.