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What is the World Trade Organization?

By Felicia Dye
Updated: May 16, 2024

According to the World Trade Organization (WTO), its goal is to help producers of goods and services, exporters, and importers conduct their business. This international organization accomplishes this mainly by helping countries establish and agree upon trade rules. Without such an organization, it is likely that trade relations between foreign entities could be difficult, unfair, and inconsistent.

The World Trade Organization was created in 1995 and has three official languages: French, English and Spanish. The organization has hundreds of members around the globe, however, and aims to work in the best interest of all of them. Most decisions made by the WTO are matters of consensus. This means that all members agree upon them.

A trade agreement usually contains both the rights and obligations of the agreeing parties. WTO agreements can generally be divided into two categories. Multilateral agreements refer to those that all World Trade Organization members have agreed to. Plurilateral agreements are those that only some members have agreed to.

Different countries tend to have different cultures. Many people in business realize that culture can be a major factor in determining how affairs are conducted. Other factors such as previous experiences, both good and bad, can determine the business decisions that are made. These are just two of many examples of factors that could cause trade barriers or trade inconsistencies if such business arrangements were left to the whim of individuals.

One thing that the World Trade Organization aims to do is normalize trade. This means that certain practices should be kept consistent. For example, the organization may secure agreements among trade partners that prevent politics from playing a role in the initiation or rise of tariffs.

In addition to easing trade transactions, the World Trade Organization also aims to eliminate discrimination from international exchange. This can produce the dual benefits of allowing producers access to foreign markets and allowing consumers access to foreign goods. This can also prevent substantial economic growth for some while economic growth is unfairly or unethically inhibited for others.

Another duty of the World Trade Organization is to act as a monitoring agency. This means the organization seeks to ensure that agreeing parties uphold their decisions. Members often have a great deal of liberty and flexibility to form their own policies, despite the agreements they sign. The WTO may review national policies and work with members on areas that may inhibit trade, smother growth, or potentially violate agreements.

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Discussion Comments
By softener — On May 11, 2011

@Sequoia - To put it simply, many people (myself included) believe the World Trade Organization helps to broaden the gap between the rich and the poor which is exactly the opposite of what it was set up to do. Part of this has to do with the claim that smaller countries hold less sway and negotiating power than the richer and more influential nations like the United States. So despite the fact that the WTO aims to help developing countries, it could be said that the richer countries are mainly looking out for their own interests.

The problem is that businesses and large corporations can manipulate the rules of the WTO and find loopholes in the system in order for them to profit. This is essentially standard business practice, but it's highly unethical, and is what allows wealthier countries to exploit poorer countries so that their own country can become even wealthier, while the poorer countries become even poorer.

That's just my viewpoint, however.

By Sequoia — On May 08, 2011

Now that I think I have an understanding of what the World Trade Organization is and what it does, I'd like to know more why the World Trade Organization is criticized by some people, like Michael Moore for example? What are the flaws in the system?

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