Why does this page look this way?
It appears that you are using either an older, classic Web browser or a hand-held device that allows you to view our content but may not work with every feature of our site. If you are using an older browser, please upgrade for the best experience.
![]()
Home |
Site Index |
FAQs |
Contact |
RSS
|
Podcast
Navigation
home > by publication type > backgrounder > The World Trade Organization
| Author: | Eben Kaplan, Associate Editor |
|---|
December 9, 2005
The World Trade Organization (WTO) is the body responsible for overseeing the rules of international trade. Its duties include monitoring trade agreements, settling disputes, and facilitating trade talks. Established in 1995 and based in Geneva, Switzerland, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT), a 23- member organization founded in 1948 whose rules provided the principal foundation for international trade in goods. Today, the WTO's 148 member nations are responsible for 97 percent of world trade.
While the GATT provides the foundation for the operation of the WTO, the WTO encompasses several aspects of trade that the GATT did not. The most significant of these is the global trade in services, such as banking and telecommunications. This has become the fastest-growing sector of the world's economy, representing some two thirds of global output and nearly 20 percent of global trade. The WTO also sets rules for protecting intellectual property rights and settles international trade disputes, which the GATT did not cover.
The organization is headed by its newly appointed director-general, Pascal Lamy, and its daily operations are overseen by a General Council, elected at biennial conferences of member state representatives. The General Council then elects a director-general. WTO ministerial conferences also serve as a forum to negotiate agreements that set the legal ground rules for international commerce. Decisions are binding and thus made by consensus. Member nations enforce WTO rules by imposing sanctions on states that break them.
Nations that rely heavily upon trade are the most likely to benefit. The WTO establishes rules and structure for international trade, providing stability for these nations' commerce. The rules are intended to make trade as free and fair as possible. Free-trade advocates say freer, fairer trade can lower the cost of living while providing consumers with more choices. It can also stimulate growth, fueling development and making lives more prosperous. To this end, the 2001 ministerial conference in Doha, Qatar, agreed to the Doha Development Agenda, a series of negations aimed at giving developing nations better access to the global trading system described in this Background Q&A. Other benefits of the WTO include its ability to shield governments from lobbyists and the encouragement of good governance.
Yes. The most visible opposition came at the 1999 Ministerial Conference in Seattle, when protesters interrupted the proceedings. Yet more notable opposition came at Cancun's 2003 Ministerial Conference, where poorer nations walked out after four days of fruitless negotiations over agricultural subsidies and trade liberalization policies that mostly benefit wealthy nations.
At the opening session of the Cancun conference, UN Secretary-General Kofi Annan explained, "We are told that trade can provide a ladder to a better life and deliver us from poverty and despair...Sadly, the reality of the international trading system today does not match the rhetoric." Other critiques include charges that the WTO infringes on member states' sovereignty by forcing them to change laws and regulations to adhere with trade rules. This, critics say, is too much power for an organization whose hearings are closed to the public and the media. Others say the WTO doesn't consider the impact of free trade on workers or the environment and that the organization is dominated by wealthy nations that use it to serve their own interests.
Advocates of the WTO argue that despite closed-door meetings, the organization is democratic in that decisions are made by consensus and the rules were written by the members. They also point to cases in which developing nations have won dispute settlements with industrialized nations as evidence that the WTO is not totally dominated by the wealthy.
Weigh in on this issue by emailing CFR.org.
![]()
In Termites in the Trading System, Jagdish Bhagwati reveals how the rapid spread of preferential trade agreements endangers the world trading system.
America Between the Wars explores how the decisions and debates of the years between the fall of the Berlin Wall and the collapse of the Twin Towers shaped the events, arguments, and politics of the world we live in today.
In The Fall and Rise of the Islamic State, Noah Feldman tells the story behind the increasingly popular call for the establishment of the sharia—the law of the traditional Islamic state—in the modern Muslim world.
Complete list of CFR Books.
![]()
![]()
This report argues that the United States must lead with domestic action on climate change and proposes a U.S. negotiating strategy for a global UN climate agreement that includes commitments from all major economies, while also promoting a less formal Partnership for Climate Cooperation that would focus the world's largest emitters on implementing aggressive emissions reductions.
This Task Force report examines changes in Latin America and in U.S. influence there, while taking account of the region's enduring importance to the United States. The Task Force offers an agenda for U.S. policy toward Latin America and identifies four critical areas that should provide the basis of a new U.S. approach.
About Independent Task Forces at the Council.
![]()
![]()
After two decades of liberalization, many countries around the world are adopting new restrictions on foreign direct investment (FDI) that could retard continued progress. The authors make recommendations for correcting this protectionist drift by proposing guidelines for how countries can better regulate FDI yet still reap its economic benefits.
In this Council Special Report, the authors make a strong case that the Bush administration’s policy of diplomatic isolation of Syria is not serving U.S. interests, and offer informed history and thoughtful analysis of the country and its external behavior.
Complete list of Council Special Reports.
![]()
![]()
![]()
![]()
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1-800-537-5487, fax +1-410-516-6998.
For information on other reports that are not for sale, or for general publications information, please call +1-212-434-9516 or email publications@cfr.org.
![]()
![]()
To request permission to reuse Council materials, please email publications@cfr.org or fax +1-212-434-9859.
Please include the complete information of the requested work—author, title, sections/pages to be copied or reprinted, and number of copies to be made—along with a brief description of where and how you would like to reuse the work.
You may also request permission for Council material through Copyright Clearance Center. For more information, please click on the logo below.
![]()
By Region | By Issue | By Publication Type | The Think Tank | For The Media | For Educators | About CFR
Home | Site Index | FAQ | Contact | RSS | Podcast
Copyright 2008 by the Council on Foreign Relations. All Rights Reserved.

