The General Agreement on Tariffs and Trade (GATT) was established in 1947 as a multilateral agreement aimed at reducing trade barriers and promoting economic growth. However, as the global economy evolved, it became clear that the GATT needed to be replaced by a more robust and comprehensive organization. This led to the creation of the World Trade Organization (WTO) in 1995.
The WTO was formed to address some of the shortcomings of the GATT. One of the main reasons for the WTO`s creation was to provide a permanent forum for multilateral trade negotiations and dispute resolution. The GATT was limited in its ability to enforce trade rules and settle disputes, leading to conflicts and protectionist measures by many countries.
The WTO`s dispute settlement mechanism is a critical aspect of its success. It provides a legal framework for resolving disputes between member countries and ensures that trade rules are enforced fairly and transparently. The WTO`s dispute settlement body has the power to authorize trade sanctions against countries that violate trade rules, which provides a powerful incentive for compliance.
Another significant advantage of the WTO is its comprehensive coverage of trade-related issues. The WTO covers a wide range of trade-related topics, including agriculture, intellectual property, trade in services, and investment. This broad coverage ensures that all areas of trade are covered and that member countries are held to the highest standards.
The WTO also plays a vital role in promoting development and economic growth. The organization recognizes the importance of trade in driving economic development, and it offers developing countries special treatment and technical assistance to help them integrate into the global economy. The WTO`s focus on development has helped many countries to improve their economic performance and reduce poverty.
In conclusion, the world needed the WTO to succeed GATT to address the shortcomings of the latter. The WTO`s dispute resolution mechanism, broad coverage, and focus on development have made it an essential institution in the global economy. As the world becomes more integrated, the importance of the WTO in facilitating trade and promoting economic growth will only continue to grow.