The World Trade Organization (WTO) is an intergovernmental institution that regulates and facilitates international trade, established on January 1, 1995, under the Marrakesh Agreement. It succeeded the General Agreement on Tariffs and Trade (GATT), which was a provisional multilateral treaty signed by 23 countries in 1947. The WTO was created to solve the problem of a weak, non-institutionalized trade system by providing a permanent, rules-based framework for commerce, fulfilling the original post-World War II vision that also established the International Monetary Fund (IMF) and the World Bank. The need for a stronger body became clear after the Uruguay Round of negotiations (1986–1994), which extended trade rules into new areas like services and intellectual property.
The WTO works through a set of approximately 60 binding agreements covering trade in goods (GATT 1994), services (GATS), and intellectual property (TRIPS). A core mechanism is the principle of non-discrimination, which includes Most-Favored-Nation (MFN) treatment, requiring a member to grant the same trade advantages to all other members. The organization's most distinctive feature is its robust, two-tiered dispute settlement mechanism, governed by the Dispute Settlement Understanding (DSU), which provides a structured process for resolving conflicts between members. This mechanism involves a panel stage and an appellate review.
A significant recent change is the impairment of the Appellate Body (AB), the second instance of the dispute settlement system. Since December 2019, the AB has been unable to hear appeals because the United States blocked the appointment of new members, leaving it without the required quorum of three members. This has effectively stalled the final, binding resolution of trade disputes, though the underlying WTO agreements and the panel stage of the dispute settlement system remain in place. In response, some members, including the European Union, have created a temporary alternative, the Multi-party Interim Appeal Arbitration Arrangement (MPIA), using DSU Article 25.