Definition
The World Trade Organization, or WTO, is the international institution that administers the rules of trade between its member countries. Established in 1995 as the successor to the General Agreement on Tariffs and Trade, it provides a forum for negotiating trade agreements and a system for settling disputes.
Its membership covers most of the world's economies, and its agreements govern goods, services, and intellectual property.
Why it matters
How it works
The WTO operates on a few foundational principles. Most-favored-nation treatment requires a member to extend any trade advantage it grants one country to all others. National treatment requires imported goods to be treated no less favorably than domestic ones once they enter a market.
When members disagree over whether a policy breaks the rules, they bring the matter to the WTO's dispute-settlement system, which issues binding rulings and can authorize trade sanctions if a member does not comply. By lowering trade barriers and enforcing predictable rules, the system supports the specialization and exchange that drive global prosperity.