Definition of World Trade Organization (WTO)
The World Trade Organization (WTO) is an international body that sets and enforces the global rules of trade between nations. The organization aims to ensure that trade flows smoothly, predictably, and as freely as possible, which it achieves through overseeing the implementation, administration, and operation of the covered agreements. Additionally, it provides a forum for negotiating trade-related disputes among member countries.
The WTO’s key functions include:
- Administering WTO trade agreements
- Acting as a forum for trade negotiations
- Handling trade disputes
- Monitoring national trade policies
- Providing technical assistance and training for developing countries
- Cooperating with other international organizations
Examples
- Trade Agreements: The WTO facilitates negotiation and implementation of trade agreements such as the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
- Dispute Resolution: When countries have trade disputes, such as allegations of unfair tariffs or trade barriers, WTO provides a structured process to resolve these issues.
- Trade Policy Reviews: The WTO conducts regular reviews of individual countries’ trade policies to ensure compliance with WTO rules and to aid transparency.
Frequently Asked Questions
Q1: What is the main purpose of the World Trade Organization? A1: The main purpose of the WTO is to regulate international trade, promoting fair and free trade by tackling barriers and ensuring countries adhere to agreed-upon rules.
Q2: How many member countries are part of the WTO? A2: As of 2023, there are 164 member countries in the WTO.
Q3: What does the WTO do in case of a trade dispute? A3: The WTO provides a structured process to handle disputes, including consultation, mediation, and legal rulings to ensure compliance with international trade laws.
Q4: How often are countries’ trade policies reviewed by the WTO? A4: Trade policy reviews are conducted regularly—typically every two, four, or six years depending on the country’s size and significance in global trade.
Q5: Can the WTO enforce its decisions? A5: While the WTO cannot directly enforce decisions, it can authorize sanctions or allow members to take retaliatory measures against countries that do not comply with its rulings.
Related Terms
General Agreement on Tariffs and Trade (GATT)
A legal agreement between many countries, it aimed to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
An international agreement administered by the WTO that sets down minimum standards for many forms of intellectual property regulation.
Tariff
A tax imposed by a government on imported goods. Tariffs are a common trade barrier.
Non-Tariff Barriers
Policies or regulations other than tariffs that countries use to control the amount of trade across their borders, such as quotas, embargoes, or restrictive licensing.
Online References
- World Trade Organization (WTO) Official Website
- World Trade Organization’s Overview on Britannica
- WTO on Investopedia
Suggested Books for Further Studies
- “The World Trade Organization: A Very Short Introduction” by Amrita Narlikar
- “The WTO and International Trade Law - Dispute Settlement” by Kern Alexander
- “Understanding the WTO” published by the World Trade Organization
- “Global Rules: America, Britain and a Disordered World” by James E. Cronin
- “A Handbook on the WTO Dispute Settlement System” by the WTO Secretariat
Accounting Basics: “World Trade Organization (WTO)” Fundamentals Quiz
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