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 is more important to a nation's economy, the balance of trade or the balance ...

    Learn how to differentiate between the balance of trade and balance of payments for international trade and why the balance ...
  2. What is the difference between cost and freight (CFR) and cost, insurance and freight ...

    Find out about the difference between cost and freight and cost, insurance and freight, two commonly used international trade ...
  3. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    Learn about some international Incoterms, and find out about the difference between free on board shipping and cost and freight ...
  4. What are the ethical arguments against government subsidies to companies like Tesla?

    Learn about the ethical argument behind government subsidies.
RELATED TERMS
  1. Optimal Currency Area

    The geographic area in which a single currency would create the ...
  2. European Monetary System - EMS

    A 1979 arrangement between several European countries which links ...
  3. European Sovereign Debt Crisis

    A period of time in which several European countries faced the ...
  4. European Economic and Monetary Union (EMU)

    The successor to the European Monetary System (EMS), the combination ...
  5. Transfer Risk

    The risk that a local currency cannot be converted into the currency ...
  6. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.

You May Also Like

Related Articles
  1. Personal Finance

    Why Best Buy Failed in China

  2. Personal Finance

    Is Amazon Killing the Best Buy Business ...

  3. Economics

    Is Texas The Future Of America?

  4. Economics

    10 Most Influential Chinese Companies

  5. Stock Analysis

    Is Smaller Better When Investing Overseas?

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!