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World Trade Organization and Its Functions


The purpose of this report is to present information regarding the World Trade Organization (WTO) and its function within the context of international markets. The organization formed as a more expansive and improved version of previous international agreements. It is a critical entity in the international markets, which have become increasingly driven towards globalization in the recent decades. The global scope of the institution presents various political and logistical challenges, which require carefully evaluated solutions. The World Trade Organization, which was formed with the purpose of promoting intergovernmental cooperation and international commerce, maintains a critical role of regulating trade and balancing economic interests of different countries while seeking to serve as a platform for negotiation.


The World Trade Organization formed on the basis of a trading system known as the General Agreement on Tariffs and Trade (GATT), which was established in 1948 in the post-WWII international cooperation era. However, in the midst of globalization and formation of new sectors, the GATT principles became outdated. This led to a series of talks beginning in 1986, which became known as the Uruguay Round. The negotiations sought to expand beyond the principles of basic goods trading and included principles, which covered services, intellectual property, agriculture. Also, it focused on highly sensitive issues of tariffs, economic equality, and trade reforms (World Trade Organization, 2015).

In 1994, the final talks of the Uruguay Round concluded officially forming the World Trade Organization, which became fully operational in the next year. The organization had 128-member states, which has since grown to 164 and 23 observing countries seeking membership. The institution continuously reforms its policies. In 2001, a series of negotiations known the Doha Development Agenda began, which sought to further regulate tariffs and lower barriers to trade (World Trade Organization, 2015). Furthermore, the organization seeks to expand, involving developing states and introducing guidelines on liberalizing domestic and international economies.

Main Functions

The essential function of the WTO is to encourage free and equitable international trade, which contributes to the global economic growth and establishing intergovernmental cooperation. As a result, member states receive assurance that both consumers and producers will have guarantees and feel secure within trade agreements. In turn, this promotes stable supply lines, high quality of products, greater availability of choices, and openness of foreign markets. The WTO achieves this through trade agreements, which are negotiated using its platform and principles. Using the gravity of a multilateral trading system, the most prominent economic states ratify broad agreements with global ramifications in the international economy, which guarantees critical trade rights (Barnor, Adu-Twumwahh, & Osei, 2015).

The open negotiation platform of the WTO sought to resolve the “prisoner’s dilemma” of global trade since there was no international body, which could effectively regulate it. The functions of the WTO include the negotiation and administration of agreements, especially regarding market access and tariffs. It is part of a reduction in trade barriers and stimulating international cooperation. The organization seeks to collect data about each member state’s economies and trade policies, which facilitates fairness and open access to information essential to economic agreements. Finally, the institution maintains a critical role of providing a mechanism for the settlement of disputes. It uses a power-based and a rule-based system to negotiate any type of trade conflicts between member states, establishing a fair resolution to the dispute and potentially mending commerce relationships (Barnor, Adu-Twumwahh, & Osei, 2015).

The last several years have been increasingly difficult for the WTO, which is undergoing a systemic crisis. The institution is facing various criticisms of political biased, favoritism, and slow rate of progress. Many developing countries and even member states consider the organization to be detrimental to domestic economic growth due to a myriad of obligations, that must be followed. There are concerns that the WTO principles and procedures cannot adapt to the rapidly changing realities of the international economy, including innovative sectors, concerns for climate change, and evolving global value chains. In its evaluation of future prospects, the WTO is seeking to focus on the process of negotiations, the shifted focus towards regional trade agreements, and the sovereignty and democracy of global markets, which are critical to the multilateral trading system (VanGrasstek, 2013). There is strong contention about the direction, which the organization should take to resolve these challenges. Some are advocates for the traditional approach of thorough multi-year negotiations while others support a flexible system of amendments to the WTO accords.


The WTO was formed based off previous GATT agreements, which sought to create a global economic and trade institution. The organization continues to evolve and expand to become inclusive and a platform for negotiation and implementation of international agreements. The future of the WTO is unknown due to the volatile nature of the geopolitical climate and numerous challenges, which arise in its function as a global regulating institution. It is clear that the organization requires specific changes in structure and accords that can accommodate countries of different economic development while balancing interests in various sectors, which avoid benefiting the select few. Furthermore, WTO needs to stimulate globalization in a time when nationalism and geopolitics is causing many states to reconsider participation in international trade agreements or create regulations, which only benefit domestic businesses. The WTO continues to face criticism over its practices and function, which it needs to address in order to remain relevant.


Barnor, C., Adu-Twaumwaah, D., & Osei, P.H. (2015). The role and functions of the International Trade Organization (ITO) and the World Trade Organization (WTO): The major differences and similarities. International Journal of Sciences: Basic and Applied Research, 24(6), 92-101. Web.

VanGrasstek, C. (2013). The history and future of the World Trade Organization. Geneva, Switzerland: Atar Roto Presse SA.

World Trade Organization. (2015). Understanding the WTO. Web.

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StudyKraken. 2021. "World Trade Organization and Its Functions." September 20, 2021.


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