What is the WTO? Learn more about the World Trade Organization

05/31/2023 By Luana Oliveira 4 Minutes

Contents

What is the World Trade Organization (WTO)?

The World Trade Organization (WTO) aims to promote free and transparent international trade by establishing basic principles for countries' foreign trade policies. Based in Geneva, Switzerland, the WTO is responsible for regulating the rules of trade between nations, striving to assist producers of goods and services, exporters, and importers to conduct their businesses efficiently.

Origin and Purpose of the WTO

The WTO originated from the GATT (General Agreement on Tariffs and Trade) in 1995. The GATT, created in 1947 by 23 founding states, was structured on a system of tariff concessions for cooperation among countries in trade, combating protectionist practices and trade disputes. The WTO took on the role of administering the rules for free global trade, being crucial in managing debates among its member countries.

Today, the WTO consists of 164 members, representing 98% of global trade, with Brazil as one of the founding members of the organization. The organization oversees approximately US$ 20 trillion in trade exchanges worldwide.

How does the WTO work?

The WTO operates in various areas of international trade, with responsibilities that include:

Managing agreements that make up the multilateral trading system.
Serving as a forum for national trade and establishing international agreements.
Overseeing the adoption of the agreements for their implementation by the organization's members.
Providing technical assistance and training to developing countries.
Cooperating with other international organizations.

Key Principles of the WTO

The WTO bases its actions on four principles:

Most-favored-nation principle: A WTO member must extend any concession, benefit, or privilege granted to another member to all its trading partners.
National treatment principle: An imported product or service must receive the same treatment as a similar product or service when it enters the territory of the importing member.
Principle of commitment consolidation: A member must give others no less favorable treatment than that established in its list of commitments.
Transparency principle: Members must make public laws, regulations, and decisions of general application related to international trade, so they can be widely known by their recipients.

WTO Agreements

WTO agreements aim to address issues related to goods, services, and intellectual property, promoting reductions on customs duties and other trade barriers. A notable example was the Doha Round, initiated in 2001, focusing on issues related to developing countries.

It's important to note that this Round developed due to disagreements between the interests of developing countries and developed countries during the Uruguay Round, where new disciplines on Intellectual Property and Services were proposed by developed countries and continue to this day.

Another interesting fact is that there have been twelve WTO Ministerial Conferences, in order: Singapore (1996); Geneva (1998); Seattle (1999); Doha (2001); Cancún (2003); Hong Kong (2005); Geneva (2009 and 2011); Bali (2013), Nairobi (2015) and Buenos Aires (2017). The 12th conference took place in 2022 in Geneva, replacing the original 2020 date that was cancelled due to the Covid-19 pandemic.

Participating Countries and Controversial Cases

Some of the most active WTO members include the United States, the European Union, Canada, China, and Australia, all of whom have been part of numerous trade disputes. For instance:

Steel case: In 2002, the United States imposed tariffs on steel imports. The European Union, Japan, South Korea, and other countries brought the case to the WTO, which ruled that the tariffs were illegal.
Cotton case: In 2004, Brazil won a case against the United States for illegal subsidies to its cotton industry.
Airplanes case: In 2004, the European Union and the United States clashed at the WTO over subsidies to Airbus and Boeing. This case has been in litigation for years, with both sides winning and losing at different times.
Rare earths case: In 2014, China lost a case in the WTO for limiting exports of rare earths, crucial metals in the technology industry.

International Showcase

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We're here to make the international trade process as straightforward and efficient as possible for your company. Contact our team today and learn about all the services we have to offer!