What is WTO?

The World Trade Organization (WTO) is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. As such, it has become closely associated with globalization.
The WTO is the only international agency overseeing the rules of international trade. It polices free trade agreements, settles trade disputes between governments and organizes trade negotiations. Its decisions are absolute and every member must abide by its rulings. So, when the United States and the European Union (EU) are in dispute over bananas or beef, it is the WTO that acts as judge and jury.

The WTO has 150 members. The 27 states of the EU are represented also as the European Communities. WTO members are empowered by the organization to enforce its decisions by imposing trade sanctions against countries that have breached the rules. They do not have to be full sovereign nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations. Thus, Hong Kong became a General Agreement on Tariffs and Trade (GATE) contracting party, and Taiwan acceded to the WTO in 2002. A number of non-members have been observers (31) at the WTO and are currently negotiating their membership. With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. Some international intergovernmental organizations are also granted observer status to WTO bodies. Fifteen states and two territories so far have no official interaction with the WTO.

Based in Geneva, the WTO was set up in 1995, replacing another international organization known as the GATE. GATE was formed in 1948 when 23 countries signed an agreement to reduce customs tariffs. The WTO has a much broader scope than GATE. Whereas GATE regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking, and other issues like intellectual property rights. The highest body of the WTO is the Ministerial Conference. This meets every two years and, among other things, elects the organization’s chief executive — the director-general — and oversees the work of the General Council. The Ministerial Conference is also the setting for negotiating global trade deals, known as “trade rounds” which are aimed at reducing barriers to free trade.