The WTO, or World Trade Organization as it is otherwise known, is one of the most important organizations in the world. While you might not hear it’s name all too much, especially if you’re not into politics, the World Trade Organizaiton is vital for managing the global economy.
So what is the world trade organization? It is an international organization some what similar to but separate from the United Nations. The WTO is a relatively young organization, having come into existence in 1995, following the signing of the Marrakesh Agreement. Members have reached this agreement after 12 years of negotiation.
So what is the WTO supposed to do? It is set up to make it easier to conduct international trade. In the past, tariffs and closed markets were very common. Now, however, tariffs and other trade barriers have been reduced dramatically. This is because of the WTO and other organizations.
Governments are often very hesitant when it comes to economic policies. If the policies turn out to be bad, and people lose their jobs or otherwise suffer, they can turn on the government. If businesses are hurt, they could pay lobbyists, or fund political campaigns, or engage in other activities. This makes more neutral authorities, like the WTO, vital. They can help guide countries.
Besides lowering tariffs and encouraging trade, the World Trade Organization is also known for dealing with intellectual property law and other issues. Intellectual property law is an especially thorny issue. Developed countries like the United States tend to support strong property laws. Developing countries like India, however, tend to want property law enforcement to be more lax.
The World Trade Organization provides a forum for these countries to has out their differences. Indeed, the most succinct but accurate WTO definition might be “a negotiation forum.”
WTO Administrative Facts
The WTO is based in Geneva, Switzerland, which is a very popular country for international organizations. Switzerland has a long history of neutrality. During the great world wars and other conflicts, Switzerland stayed out of the battles.
The WTO is a relatively small organization given its scope and importance. Only about 600 people are on staff at any given time. To put this in perspective, a big department store like Walmart can have as many as 350 staff members at any given time in a single store.
Unlike the United Nations, the WTO can focus strictly on business. At the United Nations, which is headquartered in New York City, politics and ego often get in the way. This means that policy makers struggle to actually address issues.
The WTO also has a dispute settlement system. This system has proven vital for settling trade disputes and warding off potential trade wars. Trade wars are a major threat to the global economy.
The WTO is headed by a director-general. It has a budget of approximately $200 million dollars per year. 164 countries are members (more on WTO members later), and several other countries are trying to join. Its official languages are English, Spanish, and French.
WTO Membership Includes Most Countries
WTO members include most of the world’s largest and most powerful countries. The United States of America, Japan, European Union countries, Canada, you name it. The most important country that is not a member of the WTO is probably Iran. Iran is home to over 80 million people and sits on top of massive natural gas and oil reserves. Iran is trying to join the WTO.
Up until 2001, China was not a member of the WTO either. Some “Communist” countries like China have had a harder time joining these organizations because they must agree to numerous economic and trade reforms. North Korea is still not a member, though Cuba interestingly was one of the first countries to join.
Anyways the WTO is run by member governments. It must answer directly to these governments. So the WTO definition is just as an intergovernmental agency. It replaced the General Agreement on Tariffs and Trade, or GATT, that was put in place after the end of World War II.
WTO and the Doha Rounds
Since 2001, the World Trade Organization has been trying to negotiate the Doha Development Round. These negotiations focus on developing countries. Many developing countries have different needs than advanced countries. In some cases, patent laws on medicine, tearing down tariffs, and other actions would hurt developing countries immensely. So what is WTO? It’s a negotiating platform among other things.
One of the biggest sticking points, however, is the fact that some developed countries don’t want to get rid of their tariffs on agricultural goods. Some countries, like the United States, are very protective of their agricultural industries. Yet these developed countries also want developing countries to lower tariffs on industrial goods.
Negotiations may slow down under the Donald Trump administration in the United States. Trump has so far indicated that he is very skeptical of international trade. He has also used populist rhetoric to gain the support of working class Americans. These working class blue collar voters are afraid of international countries.
What does the future hold for the World Trade Organization? We’ll see, but the years ahead could be very interesting indeed.