Which organization was established in 1995 to replace GATT and continue tariff reductions?

Which organization was established in 1995 to replace GATT and continue tariff reductions?

• A. World Trade Organization
• B. World Bank
• C. International Monetary Fund
• D. Organization for Economic Cooperation and Development

Answer: (A)

Global trade governance evolved by moving from a treaty framework to a dedicated international organization in 1995. GATT laid out rules for reducing tariffs through rounds of negotiations, but a more formal structure was needed to broaden the scope and enforce the agreements. The World Trade Organization was created to replace GATT and to expand the system to cover goods, services, and intellectual property, while upholding and advancing tariff reductions through binding commitments and ongoing negotiations. It also provides a formal dispute settlement mechanism, giving members a way to resolve trade disagreements with enforceable rulings. The other organizations serve important roles in the global economy—development lending, macroeconomic policy, and policy analysis—but they do not replace GATT nor carry forward tariff reduction negotiations in the same way. Therefore, the organization established in 1995 to replace GATT and continue tariff reductions is the World Trade Organization.

Global trade governance evolved by moving from a treaty framework to a dedicated international organization in 1995. GATT laid out rules for reducing tariffs through rounds of negotiations, but a more formal structure was needed to broaden the scope and enforce the agreements. The World Trade Organization was created to replace GATT and to expand the system to cover goods, services, and intellectual property, while upholding and advancing tariff reductions through binding commitments and ongoing negotiations. It also provides a formal dispute settlement mechanism, giving members a way to resolve trade disagreements with enforceable rulings.

The other organizations serve important roles in the global economy—development lending, macroeconomic policy, and policy analysis—but they do not replace GATT nor carry forward tariff reduction negotiations in the same way. Therefore, the organization established in 1995 to replace GATT and continue tariff reductions is the World Trade Organization.