Influence of the World Trade Organization (WTO)

Description:

The organization officially commenced on January 1, 1995 under the Marrakesh Agreement, replacing the General Agreements on Tariffs and Trade (GATT), which commenced in 1947. (source wikipedia) The World Trade Organization (WTO) is responsible for defining the rules of international trade. Not only setting but also enforcing these rules by acting as a court for resolving trade disputes and by placing non-complying parties under embargo. Their ultimate goal create a level playing field for international trade and to reduce obstructive measures harming free movement of goods and services. The

Enablers:

• Good cause: The objectives of the WTO look honourable.
• EU-US trade relationship: Most trade is done between those regions
• Greed:
  • Large Multinationals: WTO rules favor large multinationals
  • Rich countries: WTO rules favor the richer countries
• Forced membership: Not being a member of WTO severly limits your trade capabilities (embargo)
• Globalization

Inhibitors:

• Unfair treatment: Third/second world countries feel exploited by some WTO regulations.

e.g. Protection of the rich: Sugar import taxes, being above 110% (150% in some countries) in many large rich countries like the US, whilst sugar import taxes in most poor nations were just 20%. The WTO actually insisted those poor countries to drop their import taxes.

• Return to protectionist measures as a result of financial downturn. Protectionist measures aimed at national/regional constituencies can threaten the free movement of goods (e.g. by imposing import duties)

Paradigms:

• Before: International trade was severly limited by local government rules
• After: International trade is easy now because consistent rules are made internationally.

References:

• [1] Foreign direct investments and the World Trade Organisation (WTO): myths and realities
• [2] The Eu's relation with the United States of America
• [3] World Trade Organization
• [4] [1]
• [5] [2]