World Trade Organisation (WTO) handout

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World trade organisation
1. Historical context:
The World Trade Organization (WTO) is an international body whose
purpose is to promote free trade by persuading countries to abolish
import tariffs and other barriers. As such, it has become closely
associated with globalisation. Also, it is an international non-profit
organization regulating trade between its participating countries. The
organization officially commenced on January 1, 1995 under the Marrakech
Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which
commenced in 1948.
The World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. At its heart are the
WTO agreements, negotiated and signed by the bulk of the world's trading
nations and ratified in their parliaments. The goal is to help producers of goods
and services, exporters, and importers conduct their business.
There are a number of ways of looking at the World Trade Organization. It is an
organization for trade opening. It is a forum for governments to negotiate trade
agreements. It is a place for them to settle trade disputes. It operates a system
of trade rules. Essentially, the WTO is a place where member governments try to
sort out the trade problems they face with each other.
The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers (who usually meet at least once every
two years) or by their ambassadors or delegates (who meet regularly in Geneva).
The WTO agreements are lengthy and complex because they are legal texts
covering a wide range of activities. But a number of simple, fundamental
principles run throughout all of these documents. These principles are the
foundation of the multilateral trading system.
The WTO's ancestor, the General Agreement on Tariffs and Trade (GATT), was
established after World War II in the wake of other new multilateral institutions
dedicated to international economic cooperation -- notably the Bretton Woods
institutions known as the World Bank and the International Monetary Fund.
Reasons for being established:
The world trade organization was established because they wanted to abolish
free trade practices by all nations. To ensure that trade among nations flows as
smoothly as possible. To require free trade practices by all nations and to
promote unrestricted trade between nations.
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The idea behind the WTO is to make trade easier. When you join the WTO, all
other members are supposed to treat you equally. You're not supposed to have
tariffs, block goods coming in from another WTO member. You have free trade
with them.
If there's some sort of dispute or disagreement between countries, you can bring
it up with the WTO and get an official judgement/ruling on your case. Finally, the
WTO keeps track of what's going on and produces
information/reports/statistics, etc.
2.…read more

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It oversees the implementation, administration and operation of the
covered agreements.
It provides a forum for negotiations and for settling disputes.
It is the WTO's duty to review and spread the national trade policies, and
to ensure the coherence and transparency of trade policies through
surveillance in global economic policy-making.
Another priority of the WTO is the assistance of developing,
least-developed and low-income countries in transition to adjust to WTO
rules and disciplines through technical cooperation and training.…read more

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Members are certain once again to be at the top of
WTO's agenda.
4. Successes and advantages of the organisation:
WTO has been very successful in lowering tariffs, especially in textiles.…read more

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Governments are shielded from lobbying: WTO system shields the
government from narrow interest. Government is better placed to defend
themselves against lobbying from narrow interest groups by focusing on
trade-offs that are made in the interests of everyone in the economy.
The system encourages good governance: The WTO system encourages
good government. The WTO rules discourage a range of unwise policies and the
commitment made to liberalize a sector of trade becomes difficult to reverse.
These rules reduce opportunities for corruption.
5.…read more

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Free Trade benefits developed countries more than developing countries.
It is argued, developing countries need some trade protection to be able to
develop new industries. The WTO has sought to maintain the same rules for
developing countries preventing them from protecting new industries. (This is
known as the infant industry argument)
2. Diversification. Arguably developing countries that specialize in primary
products (e.g. agricultural products) need to diversify into other sectors. To
diversify they may need some tariff protection, at least in the short term.…read more

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