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What is the WTO?

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WTO headquarters in Geneva.

FACT BOX

WORLD'S TOP TRADERS
Total merchandise imports and exports, 2004
1. United States $2344.3 billion
2. Germany $1629.2 billion
3. China $1154.5 billion
4. Japan $1020.3 billion
5. France $914.2 billion
6. UK $810.4 billion
7. Italy $700.2 billion
8. Netherlands $677.5 billion
9. Canada $596.3 billion 
24. India $172.8 billion
Source: WTO, October 2005

FACT BOX

TOP SERVICES TRADERS
Total services imports and exports, 2004
1. United States $578.3 billion
2. Germany $326.9 billion
3. UK $307.9 billion
4. Japan $228.9 billion
5. France $205.9 billion
6. Italy $162.6 billion
7. Netherlands $145.4 billion
8. Spain $138.2 billion
9. China $133.7 billion
16. India $80.5 billion
Source: WTO, October 2005

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World Trade Organization (WTO)
International Trade
Treaties and International Organizations

(CNN) -- The World Trade Organization was set up in 1995 with the goal of boosting global prosperity by enacting and policing trading agreements between its member nations.

Based in Geneva, Switzerland, the WTO now has 148 members -- representing the vast bulk of the world's trading nations -- and replaces the earlier General Agreement on Tariffs and Trade as the key arbiter of liberalizing trade. As such, its rules apply to more than 90 percent of all global trading.

While its stated goal is to "help producers of goods and services, exporters and importers conduct their business," the WTO has become the "bete noire" for "anti-globalization" forces who see it as the tool of multinational companies seeking to commercially exploit poorer nations.

So what does the WTO actually do?

According to its Web site, the WTO's functions are to:

  • Administer WTO trade agreements;
  • Act as a forum for trade negotiations;
  • Handle trade disputes;
  • Monitor national trade policies;
  • Provide technical assistance and training for developing countries;
  • Cooperate with other international organizations.
  • To do this, Director-General Pascal Lamy presides over an annual budget of around $125 million and a Geneva-based staff of approximately 600.

    All of the WTO's agreements are ratified by the parliaments of the member countries, three-quarters of which can be classified as "developing nations." The most significant new member of this club was China, which was granted entry to the WTO in November, 2001.

    Understandably, the WTO bristles against critics who suggest it operates as a dictatorial tool of the rich and powerful which ignores domestic issues such as health, the environment and local economic development.

    "A large body of empirical studies suggest that trade helps global allocation of resources, enhances output and productivity and increases overall welfare gains," Director-General Lamy said in a speech last month.

    "Trade allows countries to concentrate on what they can do best and translate the individual advantage that countries enjoy into maximizing productivity, which in turn can lead to development," he said.

    Trade and trade policy were "fundamentally important tools in the fight against poverty" says Lamy, adding that success in the upcoming Doha round of WTO negotiations provides "a unique opportunity to rebalance the world trading system to the interests of developing countries."

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