World Trade Organization (WTO), international body that promotes and enforces the provisions of trade laws and regulations. The World Trade Organization has the authority to administer and police new and existing free trade agreements, to oversee world trade practices, and to settle trade disputes among member states. The WTO was established in 1994 when the members of the General Agreement on Tariffs and Trade (GATT), a treaty and international trade organization, signed a new trade pact. The WTO was created to replace GATT.

The WTO began operation on January 1, 1995. GATT and the WTO coexisted until December 1995, when the members of GATT met for the last time. Although the WTO replaced GATT, the trade agreements established by GATT in 1994 are part of the WTO agreement. However, the WTO has a significantly broader scope than GATT. GATT regulated trade in merchandise goods. The WTO expanded the GATT agreement to include trade in services, such as international telephone service, and protections for intellectual property—that is, creative works that can be protected legally, such as sound recordings and computer programs. The WTO is also a formally structured organization whose rules are legally binding on its member states. The organization provides a framework for international trade law. Members can refer trade disputes to the WTO where a dispute panel composed of WTO officials serves as arbitrator. Members can appeal this panel’s rulings to a WTO appellate body whose decisions are final. Disputes must be resolved within the time limits set by WTO rules.

All of the 128 nations that were contracting parties to the new GATT pact at the end of 1994 became members of the WTO upon ratifying the GATT pact. By 2005 the WTO had 149 members. Another 32 nations and 7 organizations enjoyed observer status. Member and observer nations account for more than 97 percent of world trade.

The WTO is based in Geneva, Switzerland, and is controlled by a General Council made up of member states’ ambassadors who also serve on various subsidiary and specialist committees. The ministerial conference, which meets every two years and appoints the WTO’s director-general, oversees the General Council.

Since its creation, the WTO has attracted criticism from those concerned about free trade and economic globalization. Opponents of the WTO argue that the organization is too powerful because it can declare the laws and regulations of sovereign nations in violation of trade rules, in effect pressuring nations to change these laws. Critics also charge that WTO trade rules do not sufficiently protect workers’ rights, the environment, or human health. Some groups charge that the WTO lacks democratic accountability because its hearings on trade disputes are closed to the public and press. WTO officials have dismissed arguments that the organization is undemocratic, noting that its member nations, most of which are democracies, wrote the WTO rules and selected its leadership. WTO supporters argue that it plays a critical role in helping expand world trade and raise living standards around the world.

Criticism of the WTO reached an apex in late 1999, when more than 30,000 protesters disrupted a WTO summit in Seattle, Washington. The protesters called for reforms that would make the organization more responsive to consumers, workers, and environmentalists. The summit failed in its goal to set an agenda for a new round of global trade talks, largely because of disagreements between industrialized and developing nations. These disagreements focused on agricultural subsidies provided by the developed countries, particularly the European Union (EU) and the United States, to support their farmers. Developing countries objected to the extent of the subsidies, which amount to about $300 billion annually, arguing that such generous support artificially lowered world crop prices and made it difficult, if not impossible, for farmers in developing countries to compete. See also Globalization.

In 2001 at a summit in Doha, Qatar, WTO members agreed to an agenda for a new round of talks to be held in Cancún, Mexico, in 2003. The Cancún talks broke apart without an agreement as delegates from many developing nations walked out, objecting to the refusal of the EU, in particular, to commit to lowering its agricultural subsidies. The developing nations also objected to efforts by the EU to tie the subsidy issue to a proposal that would give multinational corporations based in the industrialized world greater access to markets in developing countries.

Nonetheless, WTO members widely supported efforts to get the multilateral negotiations back on track, and in August 2004 a deal was agreed to liberalize global trade, by lowering farming subsidies for richer countries and opening markets in more impoverished countries for manufactured products. The agreement, reached at a WTO conference in Geneva, was hailed by most country representatives as a significant breakthrough.