Table of Contents

  • When the World Trade Organization was launched 20 years ago it represented more than a reform of the old GATT system. The WTO was seen as the key pillar of a new kind of global economic order – open, inclusive, cooperative – that was taking shape in the wake of the end of the Cold War. Countries that were largely closed to the world economy for almost half a century were turning to open markets and economic integration. Many developing countries, for decades left behind by the more industrialized, were beginning a rapid economic catch up. New transport, communications, and information technologies were weaving economies more tightly together, reshaping international relations in the process. If the GATT was the product of a divided world, the WTO offered the promise of a more unified one.

  • The WTO's first 20 years have certainly not been without challenges. Its Doha Round of trade negotiations has made slow progress as WTO members grapple with the tough and complex issues raised by deepening integration. Its dispute settlement system is dealing with a growing number of trade conflicts – often involving the biggest trade powers and the most contentious policy questions – as the world's economies become more intertwined. As a main locus of global economic coordination, the WTO also finds itself at the centre of growing debates about globalization, development, climate change and many other issues that now transcend national borders – placing the world trading system in the public spotlight as never before. These challenges should not be underestimated. But nor should it be forgotten that they are the result not of the WTO's failings but of its successes. Having created an unprecedentedly open and integrated world trading order – the most far-reaching system of global economic cooperation in history – the WTO now faces the often formidable task of managing it.

  • The WTO was created in 1995 in part to place a newly expanded multilateral trading system – the result of the far-reaching Uruguay Round of trade negotiations – on a more secure and permanent institutional foundation. In certain ways, the new institution did not differ dramatically from the GATT that it replaced. The WTO occupied the same headquarters in Geneva, the size of the Secretariat grew only modestly and the Director- General of the GATT became the Director-General of the WTO. The day-to-day work of the WTO – like the GATT – was carried out by member delegations in Geneva, trade officials in national capitals and the WTO Secretariat itself. More fundamentally, the WTO remained an intergovernmental, "memberdriven" organization whose core function was to oversee and administer trade agreements negotiated among sovereign members.

  • The new WTO promised to usher in a more open and integrated global economy. The Uruguay Round – the most ambitious multilateral trade negotiation in history – had resulted in global tariff reductions of 40 per cent, the liberalization of new sectors such as agriculture, textiles and services, and firm commitments to undertake future sectoral negotiations under the newly created WTO. In the Marrakesh Declaration, which ended the Round and launched the WTO, trade ministers expressed their hope that "the trade liberalization and strengthened rules achieved in the Uruguay Round would lead to a progressively more open world trading environment… for the benefit and welfare of peoples".

  • The past 20 years have shown that transparency is an indispensable element of the multilateral trading system. Enhanced surveillance and regular monitoring of trade policies and practices have significantly contributed to global efforts at countering the potential threat of protectionist pressures and at ensuring compliance with trade commitments. Transparency requirements – and the knowledge that WTO members stand on watchful guard – create a powerful incentive for members to abide by their commitments. This increases the level of confidence in the system. Moreover, the institutionalization of domestic transparency in trade policy-making enhances government accountability and public understanding, and reduces the scope for discretionary use of trade policy measures.

  • One of the most important features of the WTO – and a major result of the Uruguay Round – is its strengthened dispute settlement system. Settling disputes has always been a core function of the multilateral trading system, but the WTO's Dispute Settlement Body (DSB) represents a significant improvement over the GATT's approach in several important respects. Above all, the system is more efficient – this is an acknowledgement of the importance of prompt dispute settlement to an effective and smooth functioning WTO. Whereas GATT disputes had no fixed timetables, the WTO instituted a more structured process with clearly defined stages and deadlines. As a result, the WTO has one of, if not the, fastest international dispute settlement mechanisms. At the panel stage, most cases are completed in about 14 months; and Appellate Body reports are, with very few exceptions, issued in no more than three months.

  • In the 20 years since the launch of the WTO, the world has changed fundamentally and so too have the challenges faced by the international community. Countries and their economies are more interdependent and interconnected than ever. Financial and economic shocks, climate and environmental damage or life-endangering epidemics spread faster than before, sometimes with devastating or potentially devastating effect, as shown by the global financial crisis of 2008 or epidemics such as SARS or bird flu earlier in the decade.

  • The growing global prominence of the WTO – especially compared to the largely unknown GATT – and the increasing public scrutiny of its work, represented one of the major challenges facing the organization over the past 20 years. Almost from the start, the WTO was subject to criticism from an anti-globalization movement deeply suspicious of the new trade body. Protests marred the WTO's May 1998 Ministerial Conference in Geneva and peaked in December 1999 with massive demonstrations at a ministerial meeting in Seattle. The ferocity of the protests, which brought tens of thousands onto the streets of the US city, severely disrupted the ministerial proceedings and came as a shock to both the organization and its supporters. The "Battle of Seattle" soon became a rallying cry for critics of the WTO, who accused the organization of being excessively secretive and insensitive to the needs of the world's poorest and most vulnerable people.

  • The WTO has achieved much over its first 20 years – perhaps even more than some of its defenders recognize. Global trade barriers are historically low, international trade rules are respected, participation in an open, increasingly integrated and rules-based world trading system has become nearly universal. More members are making use of the dispute settlement system and – with each new case – a more relevant body of WTO trade law develops. More members have access to information, not just about national trade policies, but about international trade relations as well, through the WTO's transparency and surveillance mechanisms. And more members are using WTO councils, committees, and working groups to coordinate policies and head-off disputes, providing a "soft power" complement to "hard power" rules. The fact that members are increasingly committed to expanding cooperation, respecting rules and resolving disputes through the WTO – even during periods of economic crises and uncertainty – is the strongest testament to the system's success.