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. 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 >>
  2. What are the advantages and disadvantages of the International Monetary Fund?

    Learn about some of the main advantages and disadvantages of the International Monetary Fund and why the IMF's mission is ... Read Answer >>
  3. 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 >>
  4. How are international investment banking practices regulated?

    See which international organizations are responsible for overseeing and regulating global investment banks, including the ... Read Answer >>
  5. What is the difference between a nation's current account deficit and its currency ...

    Learn the respective meanings of the two terms, current account deficit and currency valuation, and understand the relationship ... 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. 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

    IMF, WTO and World Bank: How Do They 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. Insights

    EU Threatens to Retaliate Against Any U.S. Border Tax

    Fierce resistance to President Trump’s plans to impose a border tax suggest that the U.S. may eventually walk away from the World Trade Organization.
  5. Insights

    A Brief History of International Trade Agreements

    Since the mercantilist era, world trade has become increasingly multilateral, but since WW2 there has been a definite rise in regional trade agreements.
  6. Insights

    Robert Lighthizer

    U.S. Trade Representative
  7. 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.
  8. 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.
  9. 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
RELATED TERMS
  1. World Trade Organization - WTO

    An international organization dealing with the global rules of ...
  2. General Agreement On Tariffs And Trade - GATT

    A treaty created following the conclusion of World War II. The ...
  3. General Agreement On Tariffs And Trade

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

    A protectionist tariff that a domestic government imposes on ...
  5. Commercial Policy

    The regulations and policies that determine how a country conducts ...
  6. Bretton Woods Agreement

    A landmark system for monetary and exchange rate management established ...
Hot Definitions
  1. Stagflation

    A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, ...
  2. Notional Value

    The total value of a leveraged position's assets. This term is commonly used in the options, futures and currency markets ...
  3. Interest Expense

    The cost incurred by an entity for borrowed funds. Interest expense is a non-operating expense shown on the income statement. ...
  4. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  5. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  6. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
Trading Center