The legal documents of the WTO explore this idea and the individual obligations of member countries.
From 1947 until Jan. 1, 1995, when the WTO formally came into being, the main body for settling international trade disputes was operated under the General Agreement on Tariffs and Trade. Before World War II the United States had entered into a series of bilateral trade negotiations. In the 1920s and 1930s, a series of protectionist measures, including congressional approval of the Smoot-Hawley tariff law, harmed international trade and, experts say, deepened the worldwide recession. After the war, the United States and other export-dependent countries tried to establish a trade body parallel to emerging international financial institutions, such as the World Bank. Efforts to form an international trade organization foundered, with many countries raising the same objections later leveled against the WTO: fear of lost sovereignty. In 1947 in Geneva, however, 23 nations formed the GATT. Until 1994, the GATT was the forum for resolving trade disputes and launching negotiating efforts.
There were eight trade rounds in 50 years, and they resulted, according to the U.S. trade representative's office, in a 15-fold increase in international commerce. But the GATT came under increasing criticism from nations and exporters who said it was too cumbersome and its settlement process was too open-ended. Under the GATT system, the losing party could simply block a decision. As long as no one did it, the system worked...but more and more started doing it, in 1986, when The Uruguay Round was launched in Punta del Este, 74 nations attended the conference. The final agreement, reached in 1994, was designed to reduce tariffs and trade barriers by 40 percent. It also, nearly 50 years after the idea was broached, created the WTO to oversee international trade.
Operation How and Where
World trade organization operates in the following functions:
It administers organization trade agreements,
Handles trade disputes.
Monitors national trade policies.
Provides technical assistance and training to developing countries, cooperates with other international organizations.( www.geocities.com/letoconsulting/wto_accession.htm)
Serves as a forum for trade negotiations.
The World Trade Organization is designed to create the rules involved with trade. These trading rules include all countries, not just the US, and can therefore be a little tricky at times. "The WTO establishes a structure for trade policies; it does not define results" (Bagwell &Staiger p80). As we can see, the rules of trading are simply set as guidelines and cannot guarantee a certain outcome for each individual agreement between countries. There are five main rules that the WTO depends on to operate smoothly on a daily basis and they are as follows: unbiasness, reciprocity, enforceable commitments, simplicity, as well as security valves.
1. The WTO shall make possible the implication , administration as well as operation, and promote the objectives, of this Agreement along with the Multilateral Trade Agreements, and shall also give the structure for the implementation,