The World Trade Organisation.
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 22 Mar 2021
The WTO exists the encourage and facilitate the liberalisation of trade between countries. The WTO deals with the rules of trade between nations at a global or near-global level.
Key Points on the WTO
- The World Trade Organisation (WTO) is a multi-lateral organisation based in Geneva, Switzerland
- The WTO was established in 1995 and was preceded by the General Agreement on Tariffs and Trade (GATT).
- It helps to promote free trade by persuading countries to lower their import tariffs and other barriers to open markets including widespread use of import licences, export subsidies and other non-tariff barriers
- Membership of the WTO has expanded with the successful admission of China, India and latterly, Russia to the WTO as events of global significance.
- WTO membership accounts for 98 per cent of world trade in 2014 compared with 91 per cent in 1995
Key Challenges Facing the WTO
Complexity of production:
Countries and producers increasingly specialise in certain stages of production depending on their competitive advantage. This incentivises countries to pursue bi-lateral trade agreements (between two countries) rather than agree multi-lateral (between many countres) trade deals
Shifting global economic power:
A big challenge for the WTO is to help meet the aspirations of emerging economies and overcome strains in trade relationships with developed nations
Fragmentation of the global trading system
A big risk for the WTO is that regional trading blocs are by passing attempts to secure a new global trade deal.