WTO in session in Geneva; decisions are binding on members
The World Trade Organization (WTO) is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. As such, it has become closely associated with globalisation.
The WTO is the only international agency overseeing the rules of international trade. It polices free trade agreements, settles trade disputes between governments and organises trade negotiations.
WTO decisions are absolute and every member must abide by its rulings. So, when the US and the European Union are in dispute over bananas or beef, it is the WTO which acts as judge and jury. WTO members are empowered by the organisation to enforce its decisions by imposing trade sanctions against countries that have breached the rules.
Based in Geneva, the WTO was set up in 1995, replacing another international organisation known as the General Agreement on Tariffs and Trade (Gatt). Gatt was formed in 1948 when 23 countries signed an agreement to reduce customs tariffs.
The WTO has a much broader scope than Gatt. Whereas Gatt regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking, and other issues such as intellectual property rights.
China formally joined the body in December 2001 after a 15-year battle. Russia joined only after convincing the EU and US that it had reformed business practices, and after Georgia dropped its politically-motived veto in late 2011.
The highest body of the WTO is the Ministerial Conference. This meets every two years and, among other things, elects the organisation's chief executive - the director-general - and oversees the work of the General Council.
The Ministerial Conference is also the setting for negotiating global trade deals, known as "trade rounds" which are aimed at reducing barriers to free trade.
The General Council is in charge of the day-to-day running of the WTO and is made up of ambassadors from member states who also serve on various subsidiary and specialist committees.
Among these are the Dispute Settlement Panels which rule on individual country-against-country trade disputes.
- Founded: 1995
- Members: 151 states (December 2007)
- Budget: 158 million US dollars
- Staff: About 600
- Key players: US, the EU, Japan
Director-general: Pascal Lamy
Pascal Lamy: WTO head wants to cut trade barriers
Pascal Lamy, a Frenchman and a former EU trade commissioner, became WTO head in September 2005. His campaign for the leadership focused on the developing world.
Mr Lamy said his priority would be to break an impasse over a long-awaited global trade deal, intended to cut subsidies, reduce tariffs and give a fairer deal to developing countries.
Discussions on this - the so-called Doha round of talks - began in 2001. But a breakthrough has proved elusive, with rows emerging among the WTO's key players over agricultural tariffs and subsidies.
G20 leaders called for an agreement before the end of 2008, but Mr Lamy called off a proposed ministerial meeting, citing the "unacceptably high" risk of failure. He said the worsening global economic crisis could mean there would be a better opportunity for a deal in 2009.
Mr Lamy's predecessor, Thailand's Supachai Panitchpakdi, was the first WTO director-general to come from a developing country.
The WTO has been the focal point of criticism from people who are worried about the effects of free trade and economic globalisation. Opposition to the WTO centres on four main points:
Battle for Seattle: Violent protests disrupted WTO trade talks in 1999
- WTO is too powerful, in that it can in effect compel sovereign states to change laws and regulations by declaring these to be in violation of free trade rules.
- WTO is run by the rich for the rich and does not give significant weight to the problems of developing countries. For example, rich countries have not fully opened their markets to products from poor countries.
- WTO is indifferent to the impact of free trade on workers' rights, child labour, the environment and health.
- WTO lacks democratic accountability, in that its hearings on trade disputes are closed to the public and the media.
Supporters of the WTO argue that it is democratic, in that its rules were written by its member states, many of whom are democracies, who also select its leadership.
They also argue that, by expanding world trade, the WTO in fact helps to raise living standards around the world.