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World Trade Organization

An Overview of the World Trade Organization or WTO

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WTO protests

Demonstrators break through riot police near the Hong Kong Convention and Exhibition Centre during a protest against the sixth World Trade Organization (WTO) ministerial meeting December 17, 2005 in Hong Kong.

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Updated February 28, 2011
Civilizations have traded goods for thousands of years in order to obtain products that geography does not allow them to produce efficiently. Trade is now an integral part of the world economy. The World Trade Organization (WTO) is an international organization which serves as a negotiating forum where the majority of the world's countries discuss how to make trade simpler and more beneficial for all members. Headquartered in Geneva, Switzerland, the WTO's official languages are English, French, and Spanish.

Predecessor to the WTO

The World Trade Organization is the successor to the General Agreement on Tariffs and Trade, or GATT, which was signed in 1947 to monitor the postwar realm of world trade. GATT had tremendous success in reducing tariffs, but it couldn't enforce many of its policies or solve disputes easily. Over the next fifty years, the world economy changed dramatically due to globalization and economic downturns.

Founding and Members of the WTO

To improve and replace GATT, the World Trade Organization was founded on January 1, 1995. Today, the World Trade Organization has 153 members. Members do not have to be independent countries. The European Union, Hong Kong, Taiwan, and Macau, which are not independent but control their own economies, are members. When countries apply to be members, their political, economic, and trade circumstances are studied. China became a WTO member in 2001 after fifteen years of negotiations. Russia, which has the largest economy of non-members, is currently seeking membership. Thirty countries are "observers" of the WTO. Approximately fifteen countries, including North Korea, Turkmenistan, and Somalia, have no relation with the WTO.

Considerations of the WTO

Delegates of member countries negotiate trade issues over a number of years called "rounds." Recent rounds have taken place primarily in Japan, Uruguay, and Qatar. The World Trade Organization reviews national trade policies often and encourages countries and companies to reduce or eliminate barriers to trade. These barriers include tariffs, customs taxes, export subsidies, import bans, and quotas. The WTO has been very successful in lowering tariffs, especially in textiles. The WTO works in four main areas: manufactured goods, agricultural products, services such as banking and telecommunications, and intellectual property such as patents and movies. In order to protect human rights, product and food safety, and natural resources, the WTO sometimes concedes and maintains trade barriers.

Trading Partners Equal

The basis of the World Trade Organization is the theory of nondiscrimination and the "most-favored nation." Members should apply the same trade policies for all of their trading partners. Members should also not discriminate between foreign and domestic goods and services.

Conflict Arises Occasionally

The World Trade Organization arbitrates disputes between members. The WTO has heard over 300 cases since 1995. Notable cases have involved the European Union's concerns over American beef imports, the safety of sea turtles in American waters, and the cleanliness of gas imported to America from Brazil and Venezuela. The WTO can impose sanctions on countries and force them to change their trade policies.

Aid to Developing Members

The World Trade Organization gives special assistance to developing countries, which comprise three-quarters of the WTO's members. Developing countries receive technical and financial assistance and extra time to complete tasks. An exception to the most-favored nation principle is the generalized system of preferences, whereby industrialized countries sometimes allow imports from developing countries into their markets with low tariffs. In order to raise living standards around the world, the World Trade Organization conducts economic research and works closely with other international organizations like the World Bank, The International Monetary Fund, the European Union, and regional free trade organizations like the North Atlantic Free Trade Organization (NAFTA).

Criticism of the WTO

The World Trade Organization has been criticized since its inception. Many people, strongly opposed to globalization and any "attack" on their country's traditional economy and culture, believe that the WTO exerts too much pressure on independent countries to conform to its standards, benefits corporations and not common people, is not democratic, and is too secretive. Challengers believe that participation in the WTO means jobs and protection against foreign competition may be lost. Many people believe that the WTO violates environmental and labor laws. Opponents believe that developing countries actually have little negotiating power in the organization. Many protests against the WTO have occurred. Demonstrations at the WTO meeting in Seattle, Washington in 1999 caused the delay and eventual failure of WTO negotiations.

Beneficial Regulations of the WTO

In conclusion, the World Trade Organization is the most important international organization governing trade. The WTO sets and enforces trade rules and promotes global economic cooperation. Poor countries are better able to compete in the world economy. Governments will hopefully take profits from trade and improve the health, education, and employment of their citizens. International business will undoubtedly continue to thrive under the supervision of the World Trade Organization.

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