The World Commerce Agency (WTO) is an international organisation that was founded to oversee and liberalize global trade. The World Trade Organization (WTO) is the successor of the General Agreement on Tariffs and Trade (GATT), which was established in 1947 with the intention that it would be quickly replaced by a specialized agency of the United Nations (UN) known as the International Trade Organization (ITO). Although the ITO never materialized, the GATT was a huge success in liberalising global commerce during the next five decades. By the late 1980s, there were proposals for a more powerful multilateral agency to oversee trade and settle trade disputes. The World Trade Organization (WTO) commenced operations on January 1, 1995, following the conclusion of the Uruguay Round of international trade talks (1986–94).


The ITO, together with the International Monetary Fund (IMF) and the World Bank, was initially envisioned as one of the fundamental pillars of post-World War II reconstruction and economic development. The UN Conference on Trade and Employment finalised a draught charter for the ITO, known as the Havana Charter, in Havana in 1948, which would have established broad laws covering trade, investment, services, and business and employment practises. The agreement, however, was not ratified by the United States. Meanwhile, on January 1, 1948, the GATT entered into force as an agreement negotiated by 23 nations in Geneva in 1947 to phase out the use of import quotas and lower tariffs on merchandise trade.

During the last round of talks in 1994, the original GATT and any revisions made previous to the Uruguay Round were called GATT 1947. This group of agreements differed from GATT 1994, which included the changes and clarifications made during the Uruguay Round (referred to as “Understandings”), as well as a dozen additional multilateral agreements on merchandise trade. GATT 1994 formed a fundamental component of the agreement that founded the World Trade Organization. 

The General Agreement on Trade in Services (GATS), which attempted to supervise and liberalise trade; the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sought to improve intellectual property protection across borders; the Understanding on Rules and Procedures Governing the Settlement of Disputes, which established rules for resolving conflict between members; and the Trade Policy Review Mechanism, which dovetailed with the GATS (though the latter two were terminated at the end of 1997 with the creation of related WTO committees). These agreements were signed in April in Marrakech, Morocco.By the 2020s the WTO had more than 160 members. 

Goals and operations

The WTO has six primary goals: (1) to establish and enforce international trade rules, (2) to provide a forum for negotiating and monitoring further trade liberalisation, (3) to resolve trade disputes, (4) to increase the transparency of decision-making processes, (5) to collaborate with other major international economic institutions involved in global economic management, and (6) to assist developing countries in fully benefiting from the global trading system. Although these aims were shared by the GATT, the WTO pursued them more completely in practise. For example, although the GATT was almost entirely focused on products (albeit most agriculture and textiles were exempt), the WTO includes all goods, services, intellectual property, and some investment regulations.

Furthermore, the permanent WTO Secretariat, which took over from the temporary GATT Secretariat, has reinforced and codified systems for assessing trade policy and resolving disputes. Because the WTO covers many more items than the GATT, and because the number of member nations and the scope of their involvement has constantly increased—the combined share of international commerce of WTO members currently approaches 90% of the world total—open access to markets has risen significantly. Both the GATT and the WTO rules fulfil at least three functions. To begin, they seek to defend the interests of small and weak countries against the unfair trade practises of large and powerful countries.

The WTO’s most-favored-nation and national-treatment provisions require each WTO member to provide equal market access to all other members, as well as to treat local and international suppliers similarly. Second, the rules compel members to regulate trade solely through tariffs and to give market access equal to or better than that established in their schedules (i.e., the commitments that they agreed to when they were granted WTO membership or subsequently). Third, the laws are intended to assist governments in resisting lobbying efforts by domestic interest groups demanding preferential treatment. Although there have been notable exceptions to the standards, their inclusion and repetition in the fundamental WTO accords were designed to guarantee that the greatest abuses be avoided. The WTO was expected to improve economic wellbeing and lessen political tensions by giving greater clarity and predictability to international markets.

Trade Dispute Resolution

The GATT offered a forum for settling trade disputes, a role that was significantly expanded under the WTO. Members have agreed not to take unilateral action against one another. They are instead required to seek redress through the WTO’s dispute-resolution system and to follow its rules and judgments. The GATT’s dispute settlement procedures have been automated and considerably simplified, and the timeframe has been tightened. Dispute resolution begins with bilateral meetings facilitated by the director-mediation, general’s or “good offices.” If this does not work, an impartial panel is formed to hear the disagreement.

The panel sends a secret draught report to the parties for feedback, and then revises it before revealing it to the whole WTO membership. In contrast to the IMF and World Bank, which both employ weighted voting, each WTO member has only one vote. However, most decisions are taken by agreement, just as they were in the previous GATT system. After 60 days, unless one or both parties file a notice of appeal or the WTO members reject the report, it is automatically approved and legally binding. The procedure is expected to take nine months, and if an appeal is filed, the WTO Appellate Body will hear and rule on any claim of legal mistake within 60 days.

The WTO also aims to raise awareness about the scope and impact of trade-distorting measures, which it does through yearly notification requirements and a policy-review system. All changes in a member’s trade and trade-related policies must be announced and made available to trading partners. This requirement was a significant step toward more transparent government for many developing nations and countries whose economy were formerly centrally managed. The WTO evaluates the trade policies of the world’s four major traders (the European Union, the United States, Japan, and China) every two years, the policies of the next 16 largest traders every four years, and the policies of the world’s smallest traders every year.

Following thorough talks with the member countries under review, the WTO Secretariat releases its evaluation, along with a companion report from the government. As a result, the process checks how well members are achieving their obligations and gives information on freshly expanded markets. It also offers a more solid foundation for forthcoming trade discussions and trade dispute settlement.


The rate of worldwide economic integration through the GATT and WTO global trade agreements has been slower and less thorough than some members would want. Some have proposed deeper integration within subgroups of (typically neighbouring) member economies, such as those parties to the European Union, the North American Free Trade Agreement (which has since been supplanted by the United States-Mexico-Canada Agreement, signed in 2018). for political, military, or other reasons—as well as the Asia-Pacific Economic Cooperation. Despite the most-favored-nation clauses in the WTO’s founding agreements, the organisation does permit such preferential integration under specific situations. Despite the fact that many such integration agreements arguably do not cover “substantially all trade”—the WTO’s core condition—there has been little disagreement on the formation of free-trade zones and customs unions. Politically sensitive areas, such as agriculture, are the most prevalent exclusions from such accords. Beginning in the late 1990s, the World Trade Organization (WTO) was the object of harsh criticism. Opponents of economic globalisation (see antiglobalization), particularly those opposed to the rising influence of multinational companies, stated that the WTO violates national sovereignty and favours huge businesses at the expense of smaller local firms striving to compete with imports. Environmental and labour organisations (particularly those from wealthier nations) have complained that trade liberalisation hurts the environment and the interests of low-skilled unionised employees. Protests by these and other groups at WTO ministerial meetings, such as the 1999 demonstrations in Seattle, Washington, United States, which drew approximately 50,000 people, grew larger and more frequent, in part due to the development of the Internet and social media, which made large-scale demonstrations possible.

In response to such criticism, WTO advocates said that regulating trade is ineffective at protecting the environment and labour rights. Meanwhile, some WTO members, particularly developing nations, have resisted efforts to implement rules that would allow for fines against countries that fail to satisfy high environmental and labour standards, alleging that such regulations would amount to disguised protectionism.

Despite these objections, WTO membership remained appealing to nonmembers, as indicated by the expansion in membership after 1995. Most notably, China joined the WTO in 2001 following years of talks. The conditions for Chinese membership were in some ways more restrictive than those for developing countries, reflecting the concerns of some WTO members that the admission of such a large and still somewhat planned economy might have an overall negative effect on free trade.