The origin of the WTO can be traced back to the creation of the International Trade Organization at the 1944 Bretton Woods' Conference. While the terms of the ITO charter were being drafted and debated (a process which began in February of 1946 and lasted until their a final draft was produced in March 1948) and countries pondered whether they would join the organization, representatives from a group of 17 nations assembled in Geneva and concluded an interim agreement (GATT) to lower trade barriers and tariffs among themselves. The agreement, which was to take effect on 1 January 1948, was not meant to be a permanent trade body but rather a stopgap agreement to serve until the time that the ITO would be put in place.
However, when the Truman Administration decided not to submit the charter creating the ITO to the US Senate for ratification (since there were not enough votes in the Senate in favor of ratification) the plan to create the ITO was abandoned leaving the GATT Treaty in its place.
While the GATT functioned well enough, the leading members wished to replace it with a world-wide trade-regulating body like the WTO for a number of reasons. First, the GATT rules applied to trade only in merchandise goods. In addition to goods, the WTO covers trade in services and trade-related aspects of intellectual property (through the agreement on Trade-related Aspects of Intellectual Property Rights—TRIPs). Second, while GATT was a multilateral instrument, by the 1980s many new agreements of a plurilateral, and therefore selective nature had been added. The agreements which constitute the WTO are almost all multilateral and, thus, involve commitments for the entire membership. Third, The WTO dispute settlement system is faster, more automatic, and thus much less susceptible to blockages, than the old GATT system.
But beyond these practical and functional reasons for establishing the WTO, there were also more philosophical and symbolic reasons. The GATT was a set of rules, a multilateral agreement, with no institutional foundation, only a small associated secretariat which had its origins in the attempt to establish an International Trade Organization in the 1940s. By contrast, the WTO is a permanent institution with its own secretariat. Moreover, the GATT was applied on a "provisional basis" even if, after more than forty years, governments chose to treat it as a permanent commitment while the WTO commitments are fully and functionally permanent.
For the above reasons, the creation of a new, permanent trade body became one of the principal objectives about half-way through the GATT's Uruguay round, which ran from 1986 to 1994. A draft for the new international trade body, the WTO, was drafted and formally approved at the Ministerial Conference held in the ancient trade center of Marrakesh in July of 1994. Under the terms of the so-called "Final Act" signed there, the GATT was replaced by the WTO on 1 January 1995.
The Preamble of the Agreement Establishing the WTO states that members should conduct their trade and economic relations with a view to "raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of development."
Furthermore, members recognize the "need for positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in international trade commensurate with the needs of their economic development."
To contribute to the achievement of these objectives, WTO Members have agreed to enter into "reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations."
As the successor to GATT, WHO celebrated the golden jubilee of the multilateral trading system in May 1998.