The primary difference between the WTO (World Trade Organization) and the GATT (General Agreement on Tariffs and Trade) is that the GATT was a treaty, while the WTO is a fully-fledged international organization. The GATT dealt mostly with trade in goods, while the WTO encompasses trade in services and intellectual property as well.
Key Differences Explained:
To further illustrate the distinctions, consider the following:
- Status: GATT was an agreement; the WTO is an organization. The WTO has a permanent secretariat and a formal legal structure.
- Scope: GATT primarily covered trade in goods. The WTO covers goods, services (GATS - General Agreement on Trade in Services), and intellectual property (TRIPS - Trade-Related Aspects of Intellectual Property Rights).
- Dispute Resolution: The WTO has a much stronger and more effective dispute resolution mechanism compared to the GATT. The WTO dispute settlement system is more binding and automatically adopts panel reports unless there is a consensus to reject them. Under GATT, panel reports could be blocked by any member, including the losing party.
- Membership: While many countries were signatories to the GATT, the WTO has broader membership and a more formal accession process.
- Enforcement: The WTO has stronger enforcement powers than the GATT. Members are obligated to comply with the WTO's rules and dispute settlement rulings. Failure to comply can lead to trade sanctions.
- Legal Standing: GATT was a provisional agreement and was not ratified in many countries. The WTO agreements have been ratified by member parliaments, giving them greater legal standing.
Table Summarizing the Differences:
| Feature | GATT | WTO |
|---|---|---|
| Nature | Agreement | Organization |
| Scope | Primarily goods | Goods, services, intellectual property |
| Dispute Resolution | Weaker, easily blocked | Stronger, more binding |
| Enforcement | Weaker | Stronger, sanctions possible |
| Legal Standing | Provisional, not always ratified | Ratified by member parliaments |
| Duration | Temporary | Permanent |
In essence, the WTO evolved from the GATT to address the complexities of modern global trade and to provide a more robust and enforceable framework for international trade relations. The WTO builds upon the foundation laid by the GATT, incorporating new areas of trade and strengthening the rules-based system.
