Summary
Highlights
Every WTO member must adhere to the 'most favored nation' (MFN) principle, meaning trade benefits granted to one member must be extended to all others. An exception to this principle is free trade zones, such as NAFTA, Mercosur, the EU, and ASEAN, which are seen as a first step towards global integration. Global duties have significantly decreased since 1945, from an average of 40% to 2.2% today.
The WTO's budget funds the Dispute Settlement Body (DSB) for trade disputes, like the one between the US and the EU regarding Boeing subsidies, which the WTO declared illegal in 2011. Agriculture remains a significant challenge, being one of the least liberalized sectors. Fluctuations in grain prices, influenced by demand, speculation, conflicts, and weather, led to food riots in 2008. Differences between northern and southern countries, particularly regarding agricultural subsidies, hinder agreements. The 'Doha Development Round' was an attempt to build trust, but no agreements have been made yet.
The World Trade Organization (WTO) has 160 member states and its headquarters are in Geneva, Switzerland. Its main purpose is to regulate and liberalize world trade, with over 95% of global trade processed between its member states.
The idea for an organization regulating international trade emerged after World War II, alongside the UN, IMF, and World Bank. It was influenced by free trade theories and the desire to avoid economic protectionism, believed to contribute to the war. The General Agreement on Tariffs and Trade (GATT) initially regulated trade relations from 1947, signed by 23 countries, and was replaced by the WTO in 1995. Since 1950, world trade volume has increased twentyfold.