World Trade Organization is an international institution based in Geneva, Switzerland, that oversees trade agreements among its more than 150 member nations. The goal of the WTO is to expand international trade by reducing or eliminating trade barriers between nations.
WTO agreements cover trade in goods and services between member nations. Nations sometimes establish trade policies, such as tariffs (taxes on imported goods and services) and quotas (limitations on the amount of foreign goods or services a nation can import), that reduce trade between nations. Nations may also establish trade practices that benefit their own domestic businesses but put foreign companies operating within their borders at a disadvantage. WTO agreements include rules about such practices. Agreements also establish procedures for settling disputes between member nations on trade-related complaints.
The WTO also rules in disputes about whether a member is meeting its WTO obligations. WTO panels research possible violations and report their findings to the general membership. Normally, countries try to make their policies follow the panel’s rulings. If a country does not correct its trade policy, however, WTO members can authorize other countries to take steps against the offending country. For example, WTO members might increase taxes on goods exported by that country.
The WTO is sometimes controversial. Certain international organizations, including the WTO, are commonly associated with the concept of globalization—that is, the trend toward increased business, cultural, and governmental interaction between countries. Although economists believe globalization has brought wealth to many, some workers in industries traditionally protected from trade are hurt when protective trade restrictions are lifted. Critics of globalization are also concerned about the social and environmental effects of the development that trade often brings. Most economists believe that globalization began before the WTO was founded, and that it will continue whether or not the WTO promotes it. Nevertheless, the WTO is the most visible institution for international trade, and the organization’s meetings provide a natural outlet for protests.
The WTO was established in January 1995 to take the place of the General Agreement on Tariffs and Trade (GATT). The WTO administers all the global trade agreements adopted since the GATT took effect in 1947.
