What is the World Trade Organization?
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.
How is the WTO different from GATT?
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.
Who runs the WTO?
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.
Who benefits from the WTO?
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.
Does anyone oppose the WTO?
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.