Publication: Strategic Survey 2017: The Annual Assessment of Geopolitics
06 September 2017
The foundation of the World Trade Organisation (WTO) in 1995 was less a birth than a transformation. The event created a permanent, international organisation from a lesser-known but long-standing multilateral agreement on global trade. In the aftermath of the Second World War, major industrialised economies met routinely and developed a sustainable, rules-based and non-discriminatory trading system designed to prevent a repeat of the nationalist, protectionist mistakes of the Great Depression.
Twenty-three countries established the General Agreement on Tariffs and Trade (GATT) in 1947. They initially wrote rules for non-discriminatory treatment of member-country trade, then used GATT as a forum for engaging in periodic, multi-year ‘rounds’ to reciprocally cut tariffs. They completed eight such rounds between 1947 and 1994; GATT membership expanded continuously over time.
The foundation of the WTO came at the end of the final GATT round, which kicked off in Uruguay. The new organisation institutionalised a functioning, inter-state dispute-settlement procedure for easing trade friction. The WTO immediately became consensus-based, and by the end of the twentieth century had built on GATT to create an open, rules-based trading system that could address the needs of the industrialised world. By 2016, its membership had grown to include 164 countries. However, politico-economic shocks, along with institutional design flaws, now place the future of the WTO in peril.