In the aftermath of the 1929 stock market crash, the U.S. government raised average tariffs to about 60% under the Smoot-Hawley Tariff Act. These tariff increases triggered retaliation by other countries with the result that global trade fell by about two-thirds (Quibria 2026). In 1947, representatives from twenty-three countries, conscious of this history, ratified the General Agreement on Tariffs and Trade (GATT) hoping to establish an international trade regime that would prevent trade wars similar to those of the 1930s. The GATT oversaw international trade until 1995 when it was incorporated into a new entity, the World Trade Organization (WTO). The WTO organizes trade negotiations aimed at reducing trade barriers and manages proceedings to resolve trade disputes (Quibria 2026).
Until fairly recently, the trade negotiations and dispute-settlement proceedings have been highly effective at establishing a rules-based international trade regime. Average tariff rates fell from around 40% in the 1940s to less than 5% by the early 2000s (Quibria). Since 1995, about 650 trade disputes have been processed (WTO 2026). More recently, however, criticism of the WTO has grown and policies adopted by the United States, China, and other countries have undermined the organization’s ability to oversee global trade. Current membership now stands at 166 and many of the issues before the WTO are considerably more complex than the simple tariff reductions that characterized the organization’s early years. The Uruguay Round of trade negotiations that created the WTO in 1995 was the last negotiating round to be completed successfully and the dispute-settlement mechanism has been rendered inoperable by the blocking of the appointment of new judges to the Appellate Body by the United States.1 The actions of recent US administrations have been particularly damaging (Kozul-Wright 2026).
Source : unl.edu