The General Agreement on Tariffs and Trade (GATT) was an international trade agreement that was signed in 1947. Its primary goal was to promote international trade by reducing barriers to trade and standardizing trade rules among participating countries. However, as the world economy changed and trade became more complex, the need for a more comprehensive trade organization became apparent. In response to this need, the World Trade Organization (WTO) was created in 1995 to replace GATT.
The WTO is the only international organization that deals with the rules of trade between countries. Its primary function is to ensure that trade flows as smoothly, predictably, and freely as possible. The WTO agreements cover a wide range of trade-related activities, including agriculture, textiles and clothing, intellectual property, and services.
The WTO is made up of 164 member countries, which together account for more than 90% of world trade. The organization is based in Geneva, Switzerland, and has a Secretariat that carries out the day-to-day work of the organization under the guidance of the WTO’s member countries.
One of the main differences between GATT and the WTO is that the latter has a dispute settlement mechanism that allows member countries to bring trade disputes to a neutral forum for resolution. This mechanism has been used to resolve a number of high-profile trade disputes, including a dispute between the United States and the European Union over bananas and a dispute between the United States and China over intellectual property rights.
In addition to its dispute settlement mechanism, the WTO also provides technical assistance and training to developing countries to help them participate more fully in the global trading system. The organization also conducts trade negotiations among its member countries, with the goal of reducing barriers to trade and promoting economic growth.
In summary, the World Trade Organization evolved to replace the General Agreement on Tariffs and Trade (GATT). The WTO is an international organization that works to promote international trade by reducing barriers to trade, standardizing trade rules, and providing a forum for resolving trade disputes. With its 164 member countries, the WTO plays a critical role in maintaining an open, transparent, and rules-based trading system that benefits all countries.