Understanding the role of the WTO
The World Trade Organisation (WTO) is the only international organisation that deals with the rules governing trade between countries. At the heart of the Organisation are the WTO Agreements, negotiated and signed by most of the world’s trading powers and ratified by their parliaments. The aim is to help producers of goods and services, exporters and importers conduct their business.
Established in 1995, the World Trade Organisation (WTO) is an international institution that oversees the rules of world trade between nations. It replaced the General Agreement on Tariffs and Trade (GATT) of 1947, created in the aftermath of World War II. The WTO is essentially an alternative dispute or mediation entity that enforces international rules of trade between nations. The organisation provides a platform for member governments to negotiate and resolve trade issues with other members. The main purpose of the WTO is to provide open lines of communication regarding trade between 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 the negotiations are completed and an agreement has been put in place, the WTO then proposes to interpret that agreement in the event of future disputes. All WTO agreements include a settlement process, whereby the organisation legally conducts a neutral resolution of disputes.
Without the basic WTO agreements, no negotiation, mediation or resolution would be possible. These agreements set the basic legal rules for international trade that the WTO oversees. They induce a set of constraints that a country’s government must respect when formulating future trade policies. These agreements protect producers, importers and exporters while encouraging governments around the world to respect specific social and environmental standards.
The history of international trade has been a battle between protectionism and free trade, and the WTO has fuelled globalisation with both positive and negative effects. The organisation’s efforts have increased the expansion of world trade, but a side effect has been a negative impact on local communities and human rights. Sceptics believe that the WTO prevents the principles of organic democracy and has widened the gap in international wealth. They point out that the decline of domestic industries and increasing foreign influence are having a negative impact on the global economy.
President Trump has threatened to withdraw from the WTO, calling the situation a « disaster ».
A US withdrawal from the WTO could lead to an imbalance in world trade.
Written on 06/01/2021