World Trade Organization (WTO)

 

International organization that deals with the rules of trade between nations.

Established on January 1, 1995, the World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade (GATT). Created during the Uruguay Round of GATT (1986-1994), the WTO differs from its predecessor in scope and authority. Headquartered in Geneva, Switzerland, the WTO consists of 144 member countries. The organization administers WTO agreements, operates as a forum for trade negotiations, and handles disputes among members. It also monitors national trade policies and provides technical assistance for developing countries.

A primary criticism of the WTO in the United States revolves around the expanded authority of the new organization. Under GATT, signatories were not bound to the agreement. Countries joined voluntarily and could leave voluntarily. Under the terms of the World Trade Organization agreement, signatories are bound to the agreement. For instance, section 16 states that “each member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.” In addition, trade panels, instead of magistrates, decide disputes that arise between members. For example, in 2003 the trade panel ruled against India’s claim that the United States was not abiding by the WTO’s Rules of Origin for Textiles and Apparel Products. The decision of the panel is binding, and heavy fines are imposed if the judgment is ignored. Many opponents argue that these clauses violate the sovereignty of the nation and usurp domestic legislation. As a result of U.S. participation in the WTO, Congress has relegated some of its authority over trade to a supranational organization with potentially far-reaching consequences for the future economic well-being of the country.

Even as the WTO expands its role, opposition to it continues. Various labor activists, religious groups, environmentalists, and academics have created havoc in demonstrations at WTO meetings in Seattle, Prague, Melbourne, New York, Philadelphia, and Los Angeles. These groups oppose economic globalization, saying that it will mean a loss of jobs in industrialized countries as manufacturers move to countries where labor is cheap and that less developed countries are more lax on environmental controls.

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