Since its inception in 1995, the World Trade Organization (WTO) has regularly been in the news. There have been optimistic stories of expanding WTO membership that emphasize that freer trade generates numerous benefits for consumers. Newspapers report on the details of WTO entry negotiations for important countries like China and remind us of the gains from trade.
At other times, media reports might lead us to believe that disputes among WTO members are about to tear the organization apart. Disagreements between the U.S. and the European Union (EU) over everything from U.S. corporate taxation, to genetically modified organisms, to special steel tariffs make headlines worldwide.
The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)
It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations. The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO's creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (Hoekman et al; 2001).
Over three-quarters of WTO members are developing or least-developed countries. WTO claims to provide special provisions for the least-developed members are included in all the WTO agreements. WTO's call its overriding objective is to help trade flow smoothly, freely, fairly and predictably by administering trade agreements by acting as a forum for...