World Trade Organisation

The World Trade Organisation (WTO) is the central international body that sets and enforces the rules of global trade. It was created to replace an earlier, less permanent arrangement, and its core purpose is to promote free and fair trade among nations.

From GATT to WTO

After World War II, countries wanted to reduce the high customs tariffs and other trade restrictions that had damaged the global economy. In 1948, they formed the General Agreement on Tariffs and Trade (GATT) to achieve this liberalisation. GATT was a temporary agreement, not a formal organisation.

In 1994, member countries decided that a permanent institution was needed to properly oversee and promote free and fair trade. So, GATT was transformed into the World Trade Organisation (WTO), which officially came into existence on 1 January 1995.

Functions and Scope of the WTO

The WTO is the only international organisation that deals with the global rules of trade between nations. Its two main jobs are:

• Setting the rules for the global trading system.
• Resolving disputes that arise between its member nations.

The WTO’s scope is much wider than GATT’s. It does not just cover trade in physical goods. It also covers:

• Trade in services, such as telecommunications and banking.
• Other issues, such as intellectual property rights.

Criticism and Opposition

The WTO has faced significant criticism from people who are concerned about the negative effects of free trade and economic globalisation. The main arguments against it are:

• Free trade does not make ordinary people more prosperous. Instead, it is widening the gap between rich and poor, making rich countries even richer. This happens because the most influential nations within the WTO focus on their own commercial interests.
• Developed countries are hypocritical. Many of them have not fully opened their own markets to products from developing countries, even as they demand that developing countries open theirs. …