World Trade Organization (WTO), History,Facts, & Overview

World Trade Organization Background: General Agreement on Tariffs and Trade (GATT) was converted into the world trade organization (WTO) on January 1, 1995. This decision was taken in the 8th round of talks (i.e) The Uruguay round. In fact, the round started with the obvious aim to create a more stable and liberal international trade order.

So, the world trade organization was established by improving and extending GATT regulations including some unregulated sectors in the  Gatt framework such as services, protection of intellectual and industrial property rights, trade-relevant investment measures, and further liberalizing trade.

world trade organization

World trade organization will cooperate with the international monetary fund (IMF) and World Bank (WB) with a view to achieving greater advantages in global economic policy-making.

The world trade organization has the power to enforce the provisions of GATT and to assess trade penalties for states that violate the Accord.

Any country can withdraw from the world trade organization by giving six months prior notice. When one country charges another with trade violations, a three-judge panel under the world trade organization will hear the complaint. 

If the panel finds a violation the world trade organization may impose sanctions on the offending country. Each country has one vote in the WTO and sanctions may be imposed by the two-thirds votes.

Guiding Principles of World Trade Organization:

The guiding principles of GATT became the part and parcel of the world trade organization. These are as follows:

  1. Trade is to be conducted in a non-discriminatory manner. A nation’s trade policy should be applied equally to all states.
  2. Protection may be applied to the domestic industry through custom tariffs, but the general level of protection should be gradually reduced.
  3. Disagreements on trade are to be resolved through consultation.
  4. Parties should take certain joint actions as necessary in furtherance of the objectives of the world trade organization.
  5. It bans the use of quantitative restrictions on trade.
  6. It follows unconditional MFN status.

 Objectives of World Trade Organization:

The exclusive aim of establishing a world trade organization, a successor organization to the historic institution of GATT is to facilitate the implementation and cooperation of all agreements in connection with the Uruguay round. 

The objectives of the world trade organization set forth are as under-

  1. Raising the standard of living and income.
  2. Ensuring full employment.
  3. Expanding production and trade (output).
  4. Optimum use of world resources.

  Legal Status of World Trade Organization:

The organization will have a legal personality and will be accorded legal privileges and immunities similar to those accorded to specialized agencies of UNO. The world trade organization will have the status of the IMF and WB.

Decision-Making Process:

It will follow the same principles for decision-making as existed in the GATT. A voting procedure will be adopted if a decision can’t be reached by consensus. The decision will be taken by a majority of votes etc on the basis of one vote for each country.

Criticism On World Trade Organization:

Serving the Interest of MNCs:

World trade organization serves the interests of multinational corporations. The WTO rules are written by MNCs with inside access to negotiation. As US trade representation relies on the “ industry sector advisory committees” to provide input into trade negotiations. Other organizations such as human rights, environmental, and labor have been ignored and all proceedings of the world trade organization are kept secret.

Undermining National Sovereignty:

World trade organization undermines the national sovereignty of states by creating a multinational court system with the power to sanction and force a state to comply with WTO rules.

It has replaced nations’ governments with unelected, unaccountable corporate back governments.

For the last nine years, European Union has banned beef from certain states where cattle are raised with artificial growth hormones.

WTO ruled that the ban is a trade barrier and has to be removed. The European Union has to roll back its ban. Under WTO government can’t work for the public interest.

Penalizing Poor Nations:

The WTO undermines development and penalizes poor nations through MFN states, which stated that all nations must treat each other equally and treat all corporations of these states equally. No matter what is the previous record of these Multinational Corporations.

Environmental Degradation: 

The world trade organization is seriously undermining and destroying environmental policies. The WTO is used by corporate states to dismantle environmental policies to get profits.

The WTO has ruled out illegal the “ Endangerous Species Act” which requires shrimp to be caught with a device that could allow the endangered turtles to escape in the US.

Biased Court System:

In most of the world trade organizations dispute decisions by judges are often very much biased.

Sometimes the judges are very corrupt or have links with corporations and that’s why they are supported by them.

Corporate Dominated Colonization:

The tide is turning against free trade which is, in fact, corporate-dominated colonization and in turn, oppose the world trade organization which mostly encourages free trade. 

These are groups within Europe and the U.S. itself that are compulsory campaigning against free trade and WTO (e.g) People Global Action and Citizens Trade Campaign in the U.S.

Most Americans agree that countries should not approve these laws of the world trade organization which disapproves of our national or domestic laws.

The manifestation of such disapproval was proven in the demonstration around the world and particularly in Seattle against the WTO meeting.


The world trade organization would be concerned with the implementation of various agreements including in the final acts of the Uruguay round such as agreements on markets, agriculture, trade-related policies of investment, intellectual property rights, subsidies, countervailing measures, etc.

The basic theme of the Uruguay round accord is that the trade rules, discipline, concession, communication, and obligations must remain the same for all states developed and developing.

Most of the concessions given to the developing countries under various Uruguay round agreements are time-related rather than preferent treatment for developing states. 

The Uruguay round accord conveyed clearly the signal of industrialized states to the developing world that market access must be given on equal terms by the developed states if they were to gain access to the market, industrialized states.

Therefore each developing country increases international competition in the domestic market, while it geared itself to meet international competition in order to enhance its export earnings.

What does the World Trade Organization do?

It is a place for member governments to negotiate trade agreements and settle trade disputes. The world trade organization is a forum where member states try to resolve the trade problems they face with each other.

What is the world trade organization’s main goal?

The main objective of the WTO is to help and support its member states as means to raise living standards and income, improve people’s lives, create jobs, and ensure full employment