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. 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 >>
  2. Which countries have the highest tariffs?

    Find out which countries have the most restrictive import tariffs on international products, based on data collected by the ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. How are international investment banking practices regulated?

    See which international organizations are responsible for overseeing and regulating global investment banks, including the ... Read Answer >>
  6. What is the difference between a global fund and an international fund?

    In the English language, "global" and "international" tend to be used interchangeably - hence the confusion in the investing ... Read Answer >>
Related Articles
  1. 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.
  2. Insights

    8 Biggest Global Trade Offenders

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

    Why Century Aluminum Stock Surged 15% Thursday

    Century Aluminum stock rose as high as 15.7%, narrowly missing a new 52-week high at $10.39.
  4. 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.
  5. Insights

    Trump May Aim at These New Trade War Targets

    Beyond China, Trump may focus his ire on big trade deficits with India, Thailand, Vietnam and Malaysia
  6. Trading

    Bretton Woods: How It Changed the World

    While the Bretton Woods system is no longer in place, it fundamentally changed the international monetary order.
  7. Investing

    Understanding Free Trade

    Free trade exists when nations can swap goods and services without the constraints of tariffs, duties or quotas.
  8. Trading

    Global Trade And The Currency Market

    Learn how the Bretton Woods system got the ball rolling for world trade.
  9. Insights

    The Basics Oof Tariffs And Trade Barriers

    Everything you need to know - from the different types of tariffs to their effects on the local economy.
  10. Trading

    Forex: World's Biggest Market A Relative Newcomer

    Unlike the stock markets, the forex market is a truly new market. We’ll take a brief look at its origins and how it works today.
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. Balanced Trade

    A condition in which an economy runs neither a trade surplus ...
  4. Bretton Woods Agreement

    A landmark system for monetary and exchange rate management established ...
  5. International Finance

    Definition of international finance
  6. Free Trade

    The unrestricted purchase and sale of goods and services between ...
Hot Definitions
  1. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  2. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  3. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  4. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  5. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  6. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
Trading Center