World Trade Organization (WTO): Purpose, power, function & history

What is the World Trade Organization?

The world trade organization (WTO) is a global organization that aims to promote free and fair trade among nations. Established in 1995, it serves as a forum for member countries to negotiate and enforce trade agreements, as well as settle trade disputes.

The WTO plays a crucial role in shaping international trade policy and has a significant impact on global economic development. This article will explore the power, purpose, function and history of the WTO.

The history of the World Trade Organization

The world trade organization (WTO) is a global organization that was established in 1995 to promote free and fair trade among nations. However, the history of the organization goes back much earlier to the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947.

GATT was established in the aftermath of the world war II as a way of promoting international trade as well as reducing the barriers to trade, such as tariffs and quotas. The organization was designed to be a forum for member countries to negotiate trade agreements and settle trade disputes that arose in the process. GATT succeeded in reducing tariffs and other trade barriers, which helped to promote economic growth and development around the world.

Nonetheless, GATT had some limitations; for example, it had no permanent secretariat, and its decision-making process was based on consensus, which made it even more difficult to reach agreements. Additionally, GATT did not have the power to enforce trade agreements or conduct surveillance on the trade policies of its member countries.

In the 1980s, the World Trade Organization (WTO) was established as a successor to GATT to address these limitations. The organization was established in 1995 through the Uruguay round of trade negotiations, which was launched in 1986. The Uruguay round was the most ambitious trade negotiation in history, and it resulted in the creation of the WTO.

Since its establishment, the WTO has played a significant role in shaping international trade policies. The organization has conducted several rounds of trade negotiations, including the Doha development agenda, which was launched in 2001 and aimed to reduce barriers to trade in agriculture, services, and industrial goods. The Doha round was not completed, but it was instrumental in bringing new issues to the table such as intellectual property, environment and labor rights.

In recent years, the WTO has faced some challenges, including a lack of progress in trade negotiations and concerns about the effectiveness of its dispute settlement mechanism. However, the organization continues to play a crucial role in shaping international trade policy and promoting economic growth and development around the world.

The power of the World Trade Organization

The World Trade Organization (WTO) is a powerful institution that plays a crucial role in shaping international trade policy. Its power comes from its ability to negotiate and enforce trade agreements among its member countries, as well as settle disputes that arise in the process. The organization has the authority to make binding decisions that affect the trade policies of its member countries, which gives it a significant degree of influence over the global economy.

One of the most important powers of the WTO is its ability to negotiate trade agreements. The organization conducts trade negotiations among its member countries, which are known as rounds. These rounds are designed to liberalize trade and reduce barriers to trade, such as tariffs and quotas. The most recent round, the Doha development agenda, was launched in 2001 and aimed to reduce barriers to trade in agriculture, services and industrial goods. Although the Doha round was not completed, it was instrumental in shaping the global trade landscape by bringing new issues to the table such as intellectual property, environment and labor rights.

Another key power of the WTO is its ability to enforce trade agreements. The organization has a dispute settlement mechanism that allows member countries to bring disputes to the organization for resolution. This mechanism is designed to provide a fair and impartial forum for resolving trade disputes, and the decisions of the organization are binding on the parties involved. The dispute settlement mechanism has been used to resolve a wide range of disputes, including disputes related to trade in goods, services, and intellectual property.

The WTO also has the power to make binding decisions that affect the trade policies of its member countries. This is done through the organization’s decision-making process, which is based on the principle of consensus. This means that all member countries must agree on any decision made by the organization. This gives the organization a significant degree of influence over the trade policies of its member countries, as countries must take the decisions of the organization into account when setting their own trade policies.

Furthermore, the organization has the power to conduct surveillance on the trade policies of its member countries. The WTO conducts regular reviews of the trade policies of its member countries, known as trade policy reviews, which are designed to assess the trade policies of countries and identify any issues that may need to be addressed. This surveillance allows the organization to keep a close eye on the trade policies of its member countries and ensure that they are in compliance with their WTO commitments.

Purpose and functions of the World Trade Organization

The World Trade Organization (WTO) is an international organization that oversees and regulates the rules of global trade between countries. Its purpose is to promote free and fair trade among nations by setting and enforcing rules and policies that govern international trade.

1. Facilitating trade negotiations

The WTO acts as a forum for countries to negotiate trade agreements and resolve disputes. It facilitates negotiations between countries to reduce trade barriers, such as tariffs and quotas, and to establish fair and consistent rules for trade.

2. Monitoring trade policies

The WTO monitors the trade policies of its member countries to ensure they are in compliance with the rules and agreements established by the organization.

It also provides a mechanism for countries to challenge trade policies that they believe are unfair or in violation of WTO rules.

3. Providing technical assistance

The WTO provides technical assistance to developing countries to help them integrate into the global trading system.

This includes providing training and capacity building to help these countries participate in trade negotiations and implement WTO agreements.

4. Promoting economic growth and development

The WTO aims to promote economic growth and development by reducing barriers to trade and encouraging cross-border investment.

This helps to create jobs, increase economic growth and raise living standards in countries around the world.

5. Acting as a mediator

The WTO acts as a mediator to resolve disputes between member countries related to trade. This includes providing a dispute settlement mechanism that allows countries to resolve disputes through consultation and negotiation, rather than through retaliation or other forms of coercion.

Also read – World Bank: Purpose, power, functions and history

Conclusion

The world trade organization (WTO) is a powerful institution that plays a vital role in shaping the global trade landscape through its ability to negotiate and enforce trade agreements, settle disputes, and make binding decisions that affect the trade policies of its member countries.

The organization has played a significant role in shaping the history of international trade and continues to do so.