Agreement Establishing the World Trade Organisation 1995

The Agreement Establishing the World Trade Organisation 1995 (“WTO Agreement”) is a short agreement setting out the role, structure and powers of the World Trade Organisation (“WTO”)^[1]. It was signed in Marrakesh on 15 April 1994 at the end of the Uruguay Round of the Multilateral Trade Negotiations.

The WTO Agreement was part of the treaty that established the WTO^[2]. Prior to the WTO’s establishment, the General Agreement on Tariffs and Trade (GATT) governed the rights and obligations^[3] for trade in goods between its signatories. However, the GATT had a weak institutional basis^[4], and was not meeting evolving needs^[5]. Further, the agreements governing GATT were only signed by some signatories, and therefore had little or no impact. Therefore, at the Uruguay Round negotiations, the WTO was established out of a need for a better institution to govern international trade. In particular, there was an emphasis on efforts to improve the coherence of global economic policy-making^[6]. The WTO superseded the GATT as the umbrella organisation for international trade.

The WTO Agreement creates an entirely new international organisation (the WTO) to administer “an integrated, more viable and durable multilateral trading system^[7]”. The key aim of the WTO is “raising standards of living, ensuring full employment, expanding production and trade, and allowing optimal use of the world’s resources”^[8]. In order to facilitate this, the WTO Agreement provides the new organisation with a clear structure, political guidance, a proper staff, and appropriate financial arrangements^[9].

There are some main changes in the WTO Agreement compared to the GATT. First, the WTO Agreement relates to the production and trade of goods and services^[10], while the GATT only related to goods. Second, the WTO Agreement recognizes the need for positive efforts to ensure that developing countries “secure a share in the growth in international trade” commensurate with the needs of their economic development”^[11]. Third, it states an objective relating to sustainable development, in particular, to “protect and preserve the environment”^[12]. Another key change from the GATT relates to dispute settlement arrangements that had evolved on a largely ad-hoc basis, with separate agreements to resolve disputes depending on where they arose^[13]. Now, the WTO Agreement provides clearly that the WTO are to administer the settlement of disputes that may arise between members for the review of trade policies^[14].

Broadly, the WTO Agreement defines the functions of the organisation^[15], its structure^[16], the qualifications for membership^[17], and decision-making procedures^[18] and requirements^[19], as well as calls for efforts for improve the coherence of global economy policy-making^[20]. In particular, Article III, defines clear functions of the WTO, including implementing agreements, acting as a negotiation forum, and administering the settlement of disputes^[21]. Article V provides for the WTO to establish cooperative arrangements with other intergovernmental organisations, and non-governmental organisations with related responsibilities and interests to the WTO^[22]. In particular, the WTO Agreement specifically calls on a cooperation with the International Monetary Fund and the World Bank^[23].

2026 update

The Agreement Establishing the World Trade Organisation (Marrakesh Agreement) remains in force and its text is unchanged. However, students should be aware of significant developments affecting how the WTO functions in practice.

Dispute settlement crisis: The page references the WTO’s dispute settlement arrangements as a key improvement over the GATT system. Students must understand that since December 2019, the WTO Appellate Body has been non-functional. The United States has blocked all new appointments to the Appellate Body, which requires a minimum of three members to hear appeals. Without a functioning Appellate Body, WTO members can effectively avoid adverse panel rulings by appealing “into the void” since there is no body to hear the appeal. This represents a fundamental challenge to the WTO’s enforcement mechanism. Some members have established the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a workaround, but major economies including the United States are not participants.

Recent ministerial conferences: The WTO’s Ministerial Conference is its highest decision-making body. Recent conferences include MC12 (Geneva, 2022) which produced agreements on fisheries subsidies and a temporary waiver for COVID-19 vaccine production, and MC13 (Abu Dhabi, 2024) which continued discussions on WTO reform, dispute settlement, and e-commerce. Progress has been limited due to the consensus-based nature of WTO decision-making.

Trade facilitation agreement: Since this page was written, the Trade Facilitation Agreement entered into force in February 2017. This was the first multilateral agreement concluded at the WTO since its establishment in 1995, and aims to simplify customs procedures to reduce trade costs.

UK membership: For UK students, note that the United Kingdom remains a WTO member in its own right following Brexit. The UK was a founding member of the WTO alongside the European Communities, and its membership continued on an independent basis after leaving the EU.

Ongoing reform discussions: WTO reform remains a major topic of international discussion, with proposals addressing updating rules for digital trade, improving the dispute settlement system, and addressing concerns about the organisation’s effectiveness in the modern trading environment.

Footnotes