A:

On January 1, 1995, the World Trade Organization (WTO) came into being. The WTO was an outgrowth of the General Agreement on Tariffs and Trade (GATT), a post WWII international body meant to encourage free trade among participating nations. GATT was part of the Bretton Woods inspired family including the International Monetary Fund (IMF) and World Bank.

In theory, members of the WTO gain access to each other's markets on even terms. In one sense, this means that no two nations can have sweetheart trade pacts without granting the same terms to every other nation in the WTO. In another sense, it means that no one nation can flood another nation's market with cheap goods without accepting goods in return. The WTO was created to deal with international trade and promote free trade, which, among other objectives, involves regulating trade and helping members come to agreements on trade.

Many argue the WTO had failed in one of the basic goals it set for itself: transparency. Whether settling disputes or negotiating new trade relations, it's rarely clear which nations are in on the decision-making processes. Critics have variously used this lack of disclosure to allege that the WTO is easily manipulated by more influential countries. Many smaller and developing countries tend to have little influence in the WTO framework. (For related reading, check out The Dark Side Of The WTO and What Is The World Trade Organization?)

This question was answered by Andrew Beattie.

RELATED FAQS
  1. Which countries have the highest tariffs?

    Find out which countries have the most restrictive import tariffs on international products as ranked from data collected ... Read Answer >>
  2. What is the purpose of the International Monetary Fund?

    Read about the stated goals of the International Monetary Fund, which acts as an economic adviser and lender of last resort ... Read Answer >>
  3. What is the difference between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ... Read Answer >>
  4. How is the International Monetary Fund financed?

    Understand the purpose that the International Monetary Fund (IMF) was created for, and learn how the organization obtains ... Read Answer >>
  5. How do externalities affect equilibrium and create market failure?

    Learn about the responsibilities of the International Monetary Fund and its functions regarding the international monetary ... Read Answer >>
  6. How do tariffs protect domestic industries?

    Understand the four ways tariffs are used by domestic government to protect its domestic industries. Learn how tariffs are ... Read Answer >>
Related Articles
  1. Insights

    The Dark Side Of The WTO

    The World Trade Organization has its share of detractors. Find out why this international entity has such harsh critics.
  2. Insights

    What Is The World Trade Organization?

    The WTO sets the global rules of trade. But what exactly does it do and why do so many oppose it?
  3. Insights

    Confused How The IMF, World Bank, & WTO differ?

    From loans to Athens and trade deals in Asia to economic reports on the world’s most successful and most troubled economies, these organizations make headlines across the globe
  4. Investing

    General Agreement on Tariffs and Trade (GATT)

    The General Agreement on Tariffs and Trade was a treaty created after World War II that regulated world trade in an effort to aide economic recovery.
  5. Insights

    8 Biggest Global Trade Offenders

    Countries launch protectionist policies to keep domestic producers safe. We list the top eight offenders.
  6. Insights

    Understanding the Bretton Woods Agreement

    The Bretton Woods Agreement is a famous international monetary agreement that came out of a meeting of the UN Monetary and Financial Conference.
  7. Insights

    Goldman Sachs: Trump Likely to Hit China on Trade

    Goldman Sachs examines how trade tensions between the U.S. and China are likely to play out under the Trump presidency.
  8. Insights

    Can The IMF Solve Global Economic Problems?

    The IMF is an important tool to help struggling countries, but it's not without its problems.
  9. Investing

    Understanding Free Trade

    Free trade exists when nations can swap goods and services without the constraints of tariffs, duties or quotas.
RELATED TERMS
  1. General Agreement On Tariffs And Trade

    A treaty created following the conclusion of World War II. The ...
  2. Anti-Dumping Duty

    A protectionist tariff that a domestic government imposes on ...
  3. Third World

    A phrase commonly used to describe a developing nation, but actually ...
  4. Smoot-Hawley Tariff Act

    U.S. law enacted in June 1930 which caused an increase in import ...
  5. International Finance

    Definition of international finance
  6. Dumping

    In international trade, the export by a country or company of ...
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center