History of multilateral trading system and the WTO
The multilateral trading system after WWII
In 1944, after the worsening of economic conditions brought by destructions of the World War II, 44 allied nations met in a conference at Bretton Woods to discuss post-war international economic order. Their vision was to end the economic nationalism which fuelled the ‘Great depression” of the 1930s and to open the world markets. As a result of the conference, a new world economic order was established. The conference led to the creation of two new international organizations: the International Monetary Fund ("IMF") and International Bank for Reconstruction and Development (better known as the "World Bank"). But, the establishment of International Trade Organization ("ITO") which would lead to multilateral trade liberalization was not achieved. Drawn from commercial chapter of the ITO, the General Agreement on Tariffs and Trade ("GATT") was negotiated in Havana in 1947-1948. GATT was signed by 23 nations in Geneva in 1947 and entered into force on January 1, 1948.
(GATT negotiations in Havana, Source: www.wto.org)
Although GATT was meant to be no more than a short-term provisional agreement for 1-3 years until the expected entry into force of the ITO, it continued its provisional application for almost 50 years until the WTO’s establishment in 1995 and was the basis for the WTO. After the GATT took effect, its Members continued negotiations on further market openings. At the same time, the coverage of the negotiating parties gradually expanded. While early rounds dealt solely with tariff reductions, the Tokyo Round was the first one to address non-tariff regulatory measures. In total, 8 rounds of negotiations took place from the GATT’s provisional application to the WTO’s establishment.
The birth of the WTO
The Uruguay Round leading to the establishment of the WTO started in 1986 in Punta del Este, Uruguay, with 125 countries. It covered broad areas of trade from agriculture to intellectual property and dispute settlement and was the biggest reform in the world trade.
8 years of difficult negotiations ended with the adoption of one constitutional agreement establishing the WTO and other substantive and procedural agreements attached to it. 124 nations signed the Agreement. The “Single Undertaking” approach of the Uruguay Round implied that the WTO Agreement was open to acceptance as a whole (except for plurilateral agreements). Negotiating countries could become WTO Members only if they signed on to all provisions. There was no picking and choosing of different agreements and provisions and no reservations were accepted.
The WTO started its operation in 1995. Having a multilateral trade institution fully functioning as a permanent body has been very important for members. The WTO has been major forum for all members to make new rules, to ensure their rights and commitments are enforced, to get their disputes settled and to reach assistance from the Organization and their peers. Read more
As of August 2018, the WTO has 164 members and 22 countries are in accession process. Read more
In the XXI century, the WTO is facing new challenges. These are, among others, regulation of e-commerce, trade and non-trade linkages, such as environmental concerns, climate change, labour rights and the right to development. After the financial crisis of 2008, and in particular since 2014, the increase in the number of Members’ protectionist policies has become the biggest challenge ever faced by the WTO.