The WTO “makes the rules” for international trade. It is a relatively new organization—having been founded in 1995—and has 150 member countries. It arose from earlier trade agreements between countries, most notable the General Agreement on Tariffs and Trade. The WTO website describes the role of the organization as follows:
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Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers—for example to protect consumers or prevent the spread of disease.
[…] [***“What Is the World Trade Organization?” World Trade Organization, accessed June 30, 2011,http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm.***]
The negotiations at the WTO set the ground rules for international trade. Using the mechanisms of the WTO, countries agree on trade policies, such as the levels of tariffs. This is also a forum for designing policies on the protection of intellectual property rights. The WTO also provides a forum for dispute resolution.
Many critics of globalization have focused their attention on the WTO. For example, the nongovernmental organization Global Exchange (http://www.globalexchange.org) lists 12 “top reasons to oppose the WTO,” including the claims that the WTO is increasing hunger, increasing inequality, trampling human rights, destroying the environment, and killing people through its policies. Critics such as this group argue that the WTO is fundamentally undemocratic, writing the rules so as to favor powerful corporations and rich countries. Defenders of the WTO argue that it gives poorer countries a much greater voice in international economic decision making. They point out, for example, WTO decisions are based on consensus, meaning that all 150 member countries must agree to them.
KEY TAKEAWAY
The World Bank, the IMF, and the WTO are three leading international organizations that help countries in the development process.
The World Bank funds projects in recipient countries, the IMF provides balance of payments support, and the WTO works to reduce trade barriers.
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Checking Your Understanding
In what way does the IMF work to promote convergence across countries?
The WTO helps to govern intellectual property rights. What is the impact of those rights on development?
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