When Was The WTO Formed?

The World Trade Organization, also known as WTO, is an international organization that supervises international trade. Some of the functions of the WTO include: regulating trade, assisting countries reach trade agreements, and helping countries resolve any disputes regarding trade.

In April of 1994, the WTO regime was signed during a ministerial meeting at Morocco. This agreement was known as the Marrakesh Agreement. The agreement officially established the World Trade Organization and can thus provide the answer to when was WTO formed.

The agreement listed approximately sixty agreements between countries, annexes, decisions and understandings. The agreement itself can actually be broken into six different parts.

These parts include:

• the agreement that establishes the World Trade Organization
• goods and investments
• services
• intellectual property
• dispute settlement
• reviews of governments’ trade policies

This meeting also led to a reduction in tariffs of about forty percent. So, officially when was the WTO formed? The WTO went into operation on January 1, 1995.

Function of the WTO

The WTO creates a framework for trade policies, but it doesn’t specify the outcomes for trade. Rather, it focuses on creating rules for international trade. The following are the five principles that the WTO focuses on:

• non discrimination between countries
• reciprocity
• binding and enforceable commitments
• transparency
• safety values

These principles help the WTO create rules and ensure that fair trade is occurring. The WTO is composed of a variety of committees. Some of the committees include:

• A council for trade in goods,
• A council for trade-related aspects of intellectual property rights
• A council for trade in services
• A general council
• A committee for trade and the environment
• A committee for the balance of payments restrictions

General Agreement on Tariffs and Trade

The predecessor to the WTO was the General Agreement on Tariffs and Trade (GATT). This was created after World War II when it became clear that certain regulations were needed. From this agreement, the International Trade Organization emerged. The International Trade Organization was formed and it was going to be a United Nations specialized agency.

The purpose of the International Trade Organization was to regulate trade barriers, as well as other issues of trade, such as employment, commodity agreements, and investment. Unfortunately, the International Trade Organization was not approved by the United States, and thus the organization never went into operation. Thus, the General Agreement on Tariffs and Trade was the only governing agreement for international trade. It functioned as a multilateral treaty.

Trade Negotiations

There were, however, several negotiations to trade under the GATT. The first round of negotiations was focused on reducing tariffs. The next round resulted in the anti-dumping agreement under the GATT.

When discussing dumping in terms of international trade, it’s the act of a manufacturer in one country exporting to another country at a price lower than it is sold in its home country. The next change to the GATT was an attempt to change trade barriers that don’t take the form of tariffs. During this round of negotiations, a number of agreements were adopted on non-tariff barriers.

Difficulties Under the GATT

However, the members of GATT realized that an organization was needed to truly regulate international trade. The GATT system couldn’t truly adapt to the new technologies, and the way that globalization was changing international trade. In 1982, the Ministerial Declaration outlined a number of specific difficulties under the GATT system.

These difficulties include, but are not limited to, the following: structural deficiencies, and the impacts of certain countries’ own policies that the GATT couldn’t adapt to or manage. Another round of negotiations were needed, and multiple topics had to be covered.

This round of negotiations discussed extending the trading system into services and intellectual property, and reforming trade in the areas of agriculture and textiles, among other things.

During this round of negotiations, the World Trade Organization regime was also established. This was the beginning of the formation of the WTO.