The World Trade Organization (WTO) is the major global organization involved in negotiating, establishing, and resolving international trade rules and disputes. In 1995 the WTO replaced the General Agreement on Tariffs and Trade (GATT), which was created at the end of World War II to reduce TRADE BARRIERS through multilateral negotiations. The WTO, a powerful and controversial organization, includes more than 140 member countries; China was accepted as a member in 2001. The WTO and its predecessor, the GATT, were conceived at a conference held at the Mount Washington Hotel in BRETTON WOODS, New Hampshire, in 1944. At Bretton Woods, representatives of allied countries proposed the creation of three important international institutions, the WORLD BANK (International Bank for Reconstruction and Development), the INTERNATIONAL MONETARY FUND (IMF), and the International Trade Organization (ITO). The ITO was chartered to oversee the GATT, which originally focused on reducing TARIFFs on manufactured goods. One of the reasons for the Bretton Woods conference was the impact of 1930s trade wars on international trade relations. Beginning with the SMOOT-HAWLEY TARIFF ACT in 1930, the United States and its trading partners dramatically increased tariffs (60 percent), devastating international trade and global economic activity. Many economists consider Smoot-Hawley a significant cause of the length and depth of the GREAT DEPRESSION. The proposed ITO and GATT were designed to reduce the likelihood of future trade wars. The United Nations was given responsibility to manage the ITO and would have had a broad regulatory mandate over trade, EMPLOYMENT rules, and international business practices. However, after initially supporting the ITO, the United States, under pressure from business interests, failed to ratify legislation supporting the organization’s creation. That left the GATT, with its focus on reduction in tariffs, without the larger international trade forum, the ITO. The GATT, administered from Geneva, Switzerland, initially included 23 countries, with Canada and the United States acting as major participants. Central to the GATT (and now the WTO) is the principle of most-favorednation status. Membership in GATT entitled countries to pay the lowest tariffs applied to another country’s goods. Many countries, particularly as a result of past colonial relationships, allowed PRODUCTs from some countries to enter their country at a lower tariff than the same products coming from another country. This created an advantage for products from countries receiving favored treatment. Membership in GATT gave each country the right to similar treatment. In addition, GATT membership gave countries the right to use the GATT dispute resolution procedures and to participate in future trade-liberalization negotiations. After its inception, the GATT went through a number of “rounds” of trade negotiations, including those held at Geneva (1947); Annecy, France (1948); Torquay, England (1950); Geneva (1956); Geneva (1960–61); “Kennedy” Geneva (1964–67); “Tokyo” Geneva (1973–79); and Uruguay (1986–93). As can be observed from this, the rounds of GATT negotiations became longer over time. First, membership expanded and, acting on a basis of mutual consensus, the process became more complex. Second, the early rounds involved mostly reductions in tariff barriers, while later rounds expanded trade-liberalization efforts into new territory, including NONTARIFF BARRIERS, barriers to trade in services, and special provisions for EMERGING MARKETS. Given the United States’ growing international trade power since World War II, most countries preferred GATT as a multilateral forum for negotiations rather than bilateral negotiations. However, frustrated by the protracted nature of the Uruguay Round, Canadian interest in direct negotiations with the United States increased, resulting in the UNITED STATES-CANADA FREE TRADE AGREEMENT (1989), which became the basis for the NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA). In 1995, after eight years of negotiation, the GATT was replaced by the WTO. Today over 90 percent of international trade is governed by WTO rules. In addition to efforts to reduce tariffs, the WTO is committed to eliminating nontariff barriers. Critics argue the WTO represents a significant shift of power from citizens and national governments to a “global authority run by unselected bureaucrats.” The WTO strengthened the trade-dispute resolution process established in the GATT, making WTO panel decisions binding, with authorization to impose trade sanctions if a country does not comply with the decisions. Under the WTO, member countries have the right to challenge other countries’ federal, state, or local laws as impediments to international trade. In the United States, if the WTO panel finds a law to be WTO-illegal, the federal government may overturn local or state laws or face international trade sanctions. U.S. businesses have used WTO authority to challenge Mexican laws, and Mexican labor groups have used this to challenge U.S. business practices. Critics suggest this undermines democratic practices and will lead to changes in laws and regulations to the leasttrade- restrictive level, reducing the right and ability of a nation to control labor and environmental standards. In December 1999 the WTO attempted to hold meetings in Seattle, Washington, to begin the process of a new round of negotiations, including a multilateral INVESTMENT agreement liberalizing rules regarding the flow of CAPITAL among countries. President Bill Clinton and his administration had visions of this being part of his presidential legacy. Administration and WTO leaders were shocked by the level of protests by environmental, labor, and social activist groups and ended the meetings abruptly. WTO supporters and opponents have developed “Top 10” lists for the benefits of the WTO and reasons to oppose it. The Global Exchanges’ “Top 10 Reasons to Oppose the World Trade Organization” include
1. The WTO only serves the interests of MULTINATIONAL CORPORATIONs.
2. The WTO is a stacked court.
3. The WTO tramples over labor and human rights.
4. The WTO is destroying the environment.
5. The WTO is killing people.
6. The U.S. adoption of the WTO is undemocratic.
7. The WTO undermines local development and penalizes poor countries.
8. The WTO is increasing inequality.
9. The WTO undermines national sovereignty.
10. The tide is turning against FREE TRADE and the WTO.

The WTO lists “10 benefits of the WTO trading system.”
1. The system helps keep the peace.
2. The system allows disputes to be handled constructively.
3. A system based on rules rather than power makes life easier for all.
4. Freer trade cuts the cost of living.
5. It gives consumers more choice, and a broader range of qualities to choose from.
6. Trade raises INCOMEs.
7. Trade stimulates ECONOMIC GROWTH, and that can be good news for EMPLOYMENT.
8. The basic principles make the system economically more efficient, and they cut COSTS.
9. The system shields governments from narrow interests.
10. The system encourages good government.