The World Trade Organization is an international organization dedicated to liberalizing rules of trade between nations. Trade liberalization refers to removing and reducing restrictions to the free movement and trade of goods between countries. Trade liberalization seeks to minimize the role of governments in the resource allocation process to increase economic efficiency globally. The WTO does this by requiring member states to (1) convert all barriers to trade into tariffs (taxes on certain imports or exports) and subsequently reduce these tariffs, and (2) reduce the amount of support and subsidies they offer to exporting industries. It also works to settle trade disputes and promote the economic growth of developing countries. The organization is composed of 164 member states who govern its activities.  

Forming the World Trade Organization

The WTO was born out of the General Agreement on Tariffs and Trade (GATT) which was initially created in 1947 by the UN. Members of the GATT decided a new trade organization was necessary in 1995 due to the lackluster dispute settlement system of the GATT. The GATT required positive consensus in both the creation of a dispute resolution panel and adopting of the panel’s report. This positive consensus involved all contracting parties to the decision including the parties to the dispute itself and thus required that every party including the party subject to complaint agree to establish the panel and uphold its report. While most parties subject to complaint did not abuse their veto power, it did create a problem where many disputes went unsolved as those with complaints did not petition to create a panel due to the risk of a veto. The creation of the WTO and subsequently, the Appellate Body within the organization would solve these issues, while presenting new ones. 

Structure

The Ministerial Conference is the highest decision-making body. Ministerial Conferences involve all member states meeting every 2 years to make decisions concerning multilateral trade agreements. The General Council has representatives of all member states with the authority to act on behalf of the Ministerial Conference. Since the Ministerial Conference only meets once every 2 years, the General Council carries out day to day functions of the WTO. Sometimes the General Council may meet under a different set of rules as the Dispute Settlement Body or as the Trade Policy Review Body to solve specific issues. 

The Council for Trade in Goods, the Council for Trade in Services, and the Council for Trade-Related Aspects of Intellectual Property Rights, all report to the General Council. Each of these councils covers a broad area of trade and handle WTO agreements within their specific area of trade. These councils have committees below them governing more specific areas of trade—for example, the Goods Council has a committee on agriculture. Agreements among some, but not all, member countries are managed by committees composed of the only members to those agreements. Lastly, informal meetings such as Heads of Delegations meetings are where member states meet and make compromises and agreements. Informal meetings are often where breakthroughs and compromises are made in trade agreements.

Dispute Resolution

Similar to the original GATT of 1947, the WTO also faces issues with dispute resolution. Currently, there is a crisis with the Appellate Body, as there are not enough members remaining on the body to reach quorum. Without enough members to reach quorum, they are not legally allowed to deliberate on issues. Appellate Body member terms end, and the US has consistently blocked attempts to fill the vacant seats. The Obama, Trump, and Biden administrations have all blocked recent appointments to the body. The US objects to the operations of the Appellate Body for three reasons: 

1. The US claims that the Appellate Body is engaging in judicial activism by often going beyond resolving a singular dispute. Article 3.2 of the Dispute Settlement Understanding, which governs the activities of the Appellate Body states, “recommendations and rulings of the Dispute Settlement Body cannot add to or diminish the rights and obligations provided in the covered agreements.” The Appellate Body is allegedly doing this by clarifying and interpreting provisions found in general WTO agreements such as the General Agreement on Trade in Services. 
2. The US claims that the Appellate Body creates “binding” precedent that oversteps its role and once again steers into the area of “making law.” The Appellate Body has a system of “persuasive” precedent rather than binding precedent which means that previous reports may be relevant in similar cases, but the Appellate Body is not legally bound to consider previous reports. In a system of binding precedent, the judicial body would be legally obligated to consider a previous report in deciding a current case. The US views this usage of precedent as affecting the rights of member states without the member states themselves able to participate due to precedent. 
3. The US has concerns with case backlog in the Appellate Body as Rule 15 states that former members of the Appellate Body may remain as a member to finish working on an appeal, but this sometimes leads to a delay in issuing a report on an issue longer than 60 days which is forbidden by Article 17.5 of the Dispute Settlement Understanding. The US argues that to avoid this, members should rather take no new cases during this time.

Other Controversies

Members of both the Republican and Democratic parties have threatened to withdraw from the WTO over the key issues of China’s trade policy, globalization, and a rapidly changing global economy. Critics of the WTO point out that the Chinese government’s increasing involvement in their economy is creating unfair competition for other WTO members. China uses state subsidies to gain a competitive advantage in multiple industries such as steel and aluminum. Many feel that the WTO has been too slow to address China’s rule violations, as well as regulate and adjust to new global economic trends and markets such as ecommerce. Lastly, many attribute problems caused by globalization to the WTO, such as the loss of manufacturing jobs in the US to overseas manufacturers.