What is World Trade Organization?

The World Trade Organization (WTO) is the institution responsible for managing global trade negotiations and settling trade disputes between countries. According to the WTO, their purpose is to “to help trade flow as freely as possible — so long as there are no undesirable side effects”.¹ The WTO has 164 members (as of 2017).

The WTO was set up in 1995. The point was to find something new to replace the General Agreement on Tariffs and Trade, created after the Second World War (along with the IMF and World Bank) to reduce tariffs and trade barriers. The GATT was just a set of treaties and agreements – the WTO was to become an entire organization dedicated to negotiating new deals and enforcing old ones.

One of the key responsibilities of the WTO is to serve as court to settle disputes between countries. If a country thinks another country is cheating on one of the trade agreements it has signed, the country can bring a case to the WTO. There the countries will argue in front of a judging panel who rule on the case and come up with punishments if necessary. Countries who violate rules might have to pay fines or get economic sanctions, but sometimes the dispute is solved by letting the country that feels wronged cheat as well, and then everyone’s even.

Throughout its short history, the WTO has been incredibly controversial — its 1999 conference in Seattle created so much resistance it was later called the ‘Battle for Seattle’. As the primary international organization for promoting free trade, it has become a key symbol in the broader debate about globalization and economic openness.

The structure of the WTO comes under criticism for being undemocratic and favoring more powerful countries over less powerful ones.

Plus, they seem to have difficulty doing one of the core things they’re set up to do – creating new trade agreements for member countries. Trade agreements are traditionally held in ‘rounds’, where a series of issues are addressed in one big treaty that takes years to negotiate. The current round—named the Doha Development Round, after they city in Qatar where talks started — has been going since 2001, and has stalled considerably since the 2008 financial crash. Instead of trying for one big international agreement, many countries have been working towards regional agreements outside of the WTO, like the Trans-Pacific Partnership (TTP) or the Transatlantic Trade and Investment Partnership (TTIP), which could limit the role of the WTO if approved.