key term - WTO

Definition

The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. It serves as a forum for governments to negotiate trade agreements and resolve trade disputes.

5 Must Know Facts For Your Next Test

1. The WTO was established in 1995, succeeding the GATT, and currently has 164 member countries.
2. The WTO's primary functions are to administer trade agreements, provide a forum for trade negotiations, and settle trade disputes between member countries.
3. The WTO's core principles include non-discrimination, reciprocity, transparency, and progressive liberalization of trade.
4. The WTO's Dispute Settlement Mechanism is a key feature that allows member countries to resolve trade disputes through a rules-based system.
5. The WTO's agreements cover trade in goods, services, and intellectual property, as well as agriculture, textiles, and other specialized sectors.

Review Questions

• Explain the role of the WTO in facilitating international trade and promoting trade liberalization.
  • The WTO plays a crucial role in facilitating international trade by providing a framework for member countries to negotiate trade agreements, establish trade rules and regulations, and resolve trade disputes. Through its core principles of non-discrimination, reciprocity, and progressive liberalization, the WTO aims to promote the free flow of goods, services, and capital across borders, ultimately fostering economic growth and development for its member countries.
• Describe the key features of the WTO's Dispute Settlement Mechanism and how it helps resolve trade conflicts between member countries.
  • The WTO's Dispute Settlement Mechanism is a rules-based system that allows member countries to resolve trade disputes in a formal and structured manner. This mechanism involves a process of consultation, mediation, and, if necessary, binding rulings by a panel of experts. The goal is to ensure that trade disputes are addressed in a fair and transparent manner, upholding the WTO's principles and promoting a stable and predictable trading environment for its members. The Dispute Settlement Mechanism is a crucial tool for maintaining the integrity of the multilateral trading system and preventing the escalation of trade conflicts.
• Analyze the impact of the WTO's agreements and policies on the global economy, particularly in the context of developing countries.
  • The WTO's agreements and policies have had a significant impact on the global economy, both positive and negative. On the positive side, the WTO's promotion of trade liberalization has facilitated the expansion of international trade, leading to increased economic growth, job creation, and access to a wider range of goods and services for consumers. However, the impact on developing countries has been more complex. While trade liberalization has opened up new markets and opportunities for some developing countries, it has also posed challenges in terms of protecting domestic industries, ensuring fair competition, and addressing the uneven distribution of the benefits of trade. The WTO has sought to address these concerns through special and differential treatment for developing countries, but the overall impact remains a subject of ongoing debate and analysis.

Related terms

GATT: The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement that regulated international trade from 1947 until 1995, when it was replaced by the WTO.

Trade Liberalization:

The process of reducing or eliminating trade barriers, such as tariffs and quotas, to promote the free flow of goods and services between countries.

Dispute Settlement Mechanism: The WTO's system for resolving trade disputes between member countries through consultation, mediation, and, if necessary, binding rulings.