WTO Governs U.S. Economy


The U.S. and 22 other countries signed the General Agreement on Tariffs and Trade (GATT) in 1947 for the purpose of reducing tariffs and trade barriers throughout the globe. Today, the GATT is administered by the World Trade Organization (WTO), and it governs global trade for 146 member states, and 29 observers.

The GATT grants normal trade relations to all members, which means all counties who join are entitled to the same treatment. Nations must treat goods imported from one member, the same as their own. Any privilege extended to one, automatically applies to others. The goal of the GATT, via the WTO, is to repeal all nationally imposed tariffs, quotas, and barriers to trade.

The GATT specifically bars tariffs on imports, in excess of any taxes applied to domestic goods. It prohibits import quotas, quantitative restrictions, the dumping of foreign goods at less than normal value, voluntary export restraints, and technical regulations that discriminate against foreign goods. It seeks to end government subsidies that distort market prices.

During the first 47 years of the GATT (1947-94), their rules were enforced voluntarily, or many times not at all. When the World Trade Organization (WTO) was formed (1994) to enforce the GATT, the most significant change, was the creation of a Dispute Settlement Body (DSB) to try cases and impose sanctions.

Now, member states, usually at the request of private industries, file complaints in the DSB, and allege breaches of the GATT. If the DSB finds a violation of the GATT, it has the authority to order retaliatory sanctions against the guilty states. If the U.S., for example, proved another country discriminated against American exports, they would be allowed to impose tariffs on the violator.

Understanding the nature of the power yielded to the WTO is important, particularly in presidential election years. If candidates are well-read, they avoid promising tariffs to keep Chinese goods out, since they know such barriers would only cause the WTO to allow China and others to retaliate against U.S. exports. Smart politicians know we no longer govern our own economy and that the WTO is in control. In the upcoming presidential race, it’s high time one of them leveled with the American public.

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