World Trade Organization(WTO)

From GATT to WTO.

9 Oct, 20222 min read

General Agreement on Tariffs and Trade is an agreement that reduces the level of tariffs in multilateral negotiations. GATT operated between the years 1948-1994. Although the GATT had been successful in reducing tariffs, the global recessions in the 1970s and the 1980s led many governments to invoke nontariff barriers such as subsidies and local content requirements. At the end of the Uruguay Round in 1994, participating countries agreed to upgrade the GATT and launch the WTO. Currently, there are 164 member countries.

The overall objective of the WTO is to help its members use trade as a means to raise living standards, create jobs and improve people’s lives. The WTO operates the global system of trade rules and helps developing countries build their trade capacity. It also provides a forum for its members to negotiate trade agreements and resolve the trade problems they face with each other.

World Trade Organization was established on January 1, 1995. An international organization founded in Genova, Switzerland. WTO has more several features than GATT:

1) An agreement governing the international trade of services, the General Agreement on Trade in Services(GATS).

2) An agreement governing IP rights, the Trade-Related Aspects of Intellectual Property Rights(TRIPS).

3) Trade dispute settlement mechanisms, which allow for the WTO to adjudicate trade disputes among countries in a more effective and less time-consuming way.

4) Trade policy reviews, which enable the WTO and other member countries to peer review a country's trade policy.

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of "trade policy." Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

1. Non-discrimination

2. Reciprocity

3. Binding and enforceable commitments

4. Transparency

5. Safety values