Out of which international body did the World Trade Organization emerge?

By Andrew Beattie AAA
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. Is economics a science?

    Learn how economics fits into the category of social sciences, and discover the arguments critics make against this classification.
  2. How does globalization impact comparative advantage?

    Learn how comparative advantage is becoming increasingly relevant due to globalization and how this has affected both advanced ...
  3. When do economists use GNP?

    Learn about the ways economists use GNP. Find out how the Bureau of Economic Analysis monitors U.S. economic performance ...
  4. Is cyclical unemployment always due to recessions?

    Learn about the mechanisms that cause cyclical unemployment and find out about the role recessions and downturns play in ...
RELATED TERMS
  1. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.
  2. Welfare Capitalism

    Definition of welfare capitalism.
  3. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  4. Global Recession

    An extended period of economic decline around the world. The ...
  5. Economic Exposure

    A type of foreign exchange exposure caused by the effect of unexpected ...
  6. Heckscher-Ohlin Model

    An economic theory that states that countries export what they ...

You May Also Like

Related Articles
  1. Economics

    Iron Ore Market: Falling Into The Hands ...

  2. Stock Analysis

    What’s The Best Airline Stock In the ...

  3. Investing

    What Has Been Groupon’s Growth Strategy?

  4. Economics

    What Is Happening To The BRIC Economies?

  5. Economics

    The Economic Impact of Better US-Cuba ...

Trading Center