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. Can state and local governments in the US run fiscal deficits?

    Discover why most state and local governments do not – or cannot – run fiscal deficits in the same manner as the U.S. federal ...
  2. How do central bank decisions affect volatility?

    Using an aggregate, macroeconomic perspective, take a look at how some of the ways central bank decisions can impact market ...
  3. What percentage of the global economy is comprised of the forest products sector?

    Find out what percentage of the global economy is comprised of the forest products sector, and learn why coming up with an ...
  4. What does the term 'invisible hand' refer to in the economy?

    Discover and understand the concept of the "invisible hand" as explained by Adam Smith, considered the founder of modern ...
RELATED TERMS
  1. Welfare Capitalism

    Definition of welfare capitalism.
  2. LIBOR

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

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

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

    An economic theory that states that countries export what they ...
  6. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that decreased and ...

You May Also Like

Related Articles
  1. Economics

    What Is Happening To The BRIC Economies?

  2. Economics

    The Economic and Social Effects of Corruption

  3. Economics

    Sanctions & Falling Oil Prices Hit Ruble ...

  4. Professionals

    How Mukesh Ambani Has Expanded Reliance ...

  5. Economics

    The Economic Impact of Better US-Cuba ...

Trading Center