World Trade Organisation (WTO)

Revision notes for Unit 3 Business studies Edexcel on the WTO

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Harry Bindloss
WTO: The World Trade Organisation is a multi-lateral organisation and is the only global
international organisation dealing with the rules of trade between nations. Their main goal
is to promote free trade.
The goal of the WTO is to help producers of goods and services, exporters, and
importers conduct their business, therefore allowing nations to experience the gains
from specialisation and trade that the theory of comparative advantage will arise.
The WTO is biased to LEDC's
A WTO committee is assisted by a sub-committee of LEDC's. They look at developing
countries special needs. Its responsibility's includes implementation of the agreements,
technical cooperation, and the integration of LEDC's into the global trading system.
Advantages of the WTO
The system helps promote peace
Disputes are handled constructively
Rules make life easier for all
Free trade cuts the costs of living
It provides more choice of products and qualities
Trade raises incomes
Trade stimulates economic growth
The basic principles make life more efficient
Governments are shielded from lobbying
The system encourages good government
Disadvantages of the WTO
Unrealistic Policy - Free trade policy is based on the assumption of laissez-faire or
government non-intervention. Its success also requires the pre-condition of perfect
competition. However, such conditions are unrealistic and do not exist in the actual
Non-Cooperation of Countries - Free trade policy works smoothly if all the
countries cooperate with each other and follow this policy. If some countries decide
to gain more by imposing import restrictions, the system of free trade cannot work.

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Harry Bindloss
Economic Dependence - Free trade increases the economic dependence on other
countries for certain essential products such as food, raw materials, etc. Such
dependence proves harmful particularly during wartime.
Political Slavery - Free trade leads to economic dependence and economic
dependence leads to political slavery. For political freedom, economic independence
is necessary. This requires abandonment of free trade.…read more

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Harry Bindloss
Some poorer countries are allowed to join with existing protectionism measures. ­
E.g. India joined with tariffs still in place.…read more


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