World Trade Organization (WTO)

A multilateral organization established in 1995 at the conclusion of the Uruguay Round of negotiations of the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO) succeeds the GATT as the world's preeminent international trade organization.

The WTO administers trade agreements, provides a forum for trade negotiations, handles trade disputes, monitors national trade policies, offers technical assistance and training for developing countries, and cooperates with other international organizations. Nearly 150 nations are members of the WTO, and 30 others were negotiating membership as of 2004. The current members of the WTO account for 97% of all international trade.

The WTO is governed principally by ministerial conferences that are required to take place at least every two years under the terms of the WTO agreement. At this level, decisions are made not by voting but by consensus building among member nations (although there are provisions for voting to take place under special circumstances). During the last ministerial conference, held in Cancun, Mexico, in 2003, WTO members failed to reach a consensus.

The day-to-day government of the organization is found in its general council. Representatives from member nations (typically ambassadors) meet regularly and have the authority to make decisions on behalf of the ministerial conferences. The administrative agency of the organization, known as the WTO secretariat, consists of nearly 600 Geneva-based policy and legal specialists.

Proponents of trade liberalization and the mission of the WTO note that the volume of world trade is 22 times greater today than it was when the GATT was formed in 1947. The WTO is said to promote peace, handle disputes constructively, reduce the cost of living in member nations, enhance consumer choices, raise national incomes, stimulate economic growth, shield governments from lobbying efforts, and encourage efficient government. Moreover, given that rules are applied equally to all WTO members and that decisions are made by consensus (rather than simple majority), smaller nations enjoy more leverage with the WTO than without it; developing nations are afforded lengthier periods to adjust to WTO provisions.

Since its founding, the WTO has triggered fierce opposition, perhaps most graphically illustrated by the enormous protests and riots surrounding the 1999 ministerial conference in Seattle. Critics of the organization claim that the WTO (not sovereign governments) drives international policy making, places commercial interests above those of development, destroys the global environment, generates poverty, destroys jobs, [Page 815]and threatens safety. Notions of free trade at any cost and their subsequent calls for rapid trade liberalization have widened trade deficits in developing countries. Such nations are obligated to open up their domestic markets (and allow in more imports), but have little control over export flows. During the 1990s, the average trade deficit (as a percentage of national income) for developing countries was 3% higher than in the 1970s, just as the average rate of economic growth was 2% lower.