
World Trade Organization (WTO)
Created in 1995, the World Trade Organization (WTO) is an international institution that oversees the global trade rules among nations. Proponents of the WTO, particularly multinational corporations (MNCs), believe that the organization is beneficial to business, seeing the stimulation of free trade and a decline in trade disputes as beneficial to the global economy. The history of international trade has been a battle between protectionism and free trade, and the WTO has fueled globalization, with both positive and adverse effects. Created in 1995, the World Trade Organization (WTO) is an international institution that oversees the global trade rules among nations. For example, the WTO has lowered trade barriers and increased trade among member countries.

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What Is the World Trade Organization (WTO)?
Created in 1995, the World Trade Organization (WTO) is an international institution that oversees the global trade rules among nations. It superseded the 1947 General Agreement on Tariffs and Trade (GATT) created in the wake of World War II.
The WTO is based on agreements signed by the majority of the world’s trading nations. The main function of the organization is to help producers of goods and services, as well as exporters and importers, protect and manage their businesses. As of 2021, the WTO has 164 member countries, with Liberia and Afghanistan the most recent members, having joined in July 2016, and 25 “observer” countries and governments.



Understanding the World Trade Organization
The WTO is essentially an alternative dispute or mediation entity that upholds the international rules of trade among nations. The organization provides a platform that allows member governments to negotiate and resolve trade issues with other members. The WTO’s main focus is to provide open lines of communication concerning trade among its members.
For example, the WTO has lowered trade barriers and increased trade among member countries. On the other hand, it has also maintained trade barriers when it makes sense to do so in the global context. Therefore, the WTO attempts to provide negotiation mediation that benefits the global economy.
Once negotiations are complete and an agreement is in place, the WTO then offers to interpret that agreement in case of a future dispute. All WTO agreements include a settlement process, whereby the organization legally conducts neutral conflict resolution.
On Feb. 15, 2021, the WTO’s General Council selected two-time Nigerian finance minister Ngozi Okonjo-Iweala as its director-general. She is the first woman and the first African to be selected for the position. She took office on March 1, 2021, and her term will end in August 2025.
No negotiation, mediation, or resolution would be possible without the foundational WTO agreements. These agreements set the legal ground rules for international commerce that the WTO oversees. They bind a country’s government to a set of constraints that must be observed when setting future trade policies. These agreements protect producers, importers, and exporters while encouraging world governments to meet specific social and environmental standards.
Advantages and Disadvantages of the World Trade Organization (WTO)
The history of international trade has been a battle between protectionism and free trade, and the WTO has fueled globalization, with both positive and adverse effects. The organization’s efforts have increased global trade expansion, but a side effect has been a negative impact on local communities and human rights.
Proponents of the WTO, particularly multinational corporations (MNCs), believe that the organization is beneficial to business, seeing the stimulation of free trade and a decline in trade disputes as beneficial to the global economy. Skeptics believe that the WTO undermines the principles of organic democracy and widens the international wealth gap. They point to the decline in domestic industries and increasing foreign influence as negative impacts on the world economy.
As part of his broader attempts to renegotiate U.S. international trade deals, when he was in office, then-President Donald Trump threatened to withdraw from the WTO, calling it a “disaster.” A U.S. withdrawal from the WTO could have disrupted trillions of dollars in global trade. However, he didn’t withdraw the U.S. from the WTO during his time in office.
Related terms:
Antitrust
Antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. read more
Brexit (British Exit from the European Union)
Brexit refers to the U.K.'s withdrawal from the European Union after voting to do so in a June 2016 referendum. read more
Embargo
An embargo is a government order that restricts commerce or exchange with a specified country, usually as a result of political or economic problems. read more
Free Trade Agreement (FTA)
A free trade agreement reduces barriers to imports and exports between countries by eliminating all or most tariffs, quotas, subsidies, and prohibitions. read more
General Agreement on Tariffs and Trade (GATT)
The General Agreement on Tariffs and Trade (GATT) is an international trade treaty designed to boost member nation’s economic recovery after WWII. read more
International Commerce
International commerce is trade between companies in different countries, or just trade between different countries. read more
Market Access
Market access refers to the ability of a company or country to sell goods and services across borders. read more
Multinational Corporation (MNC)
A multinational corporation has its facilities and other assets in at least one country other than its home country. read more
Protectionism
Protectionism refers to government policies that restrict international trade to help domestic industries. read more