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World Trade Organisation |
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This essay analyses the effectiveness of the World Trade Organisation (WTO) in policing international trade. The essay begins by introducing the WTO, giving a description of its origin, functions, and an explanation as to why it is needed in world trade. The essay then goes on to describe the process by which the WTO polices international trade, with reference to its agreements and the Dispute Settlement Process. There follows a discussion on the effectiveness of the WTO’s policing of international trade, highlighting ways in which the organisation is effective in policing, and the resulting implications for international trade. Furthermore, the ways in which the WTO’s policing of international trade can be viewed as ineffective will also be highlighted, again giving the resulting implications for international trade. The essay concludes by providing a summary of the discussion and answering the question as set, by forming a stance on the overall effectiveness of the WTO in policing international trade. The multilateral framework of international trade originated after World War Two. At this time trade protectionism of the major nations as a result of the Great Depression made governments aware of the need for multilateral trade. This was fuelled by the devastation of World War Two, as the expansion of international trade viewed as an important input into the rebuilding and growth of many countries. Therefore, in 1947 the international trade chapter of the Havana Charter was converted into the General Agreement on Tariffs and Trade (GATT) which aimed to lower international tariffs on goods and generally establish a global system of free trade. ... 17) The GATT was not an organisation, instead only an agreement whose implementation was administered by the Interim Commission for International Trade Organisation. ... However, the GATT was strengthened over a period of fifty years with a series of trading rounds including the Uruguay Round of Multilateral Trading Negotiations, where the GATT was transformed into the WTO, which came into effect on the 1st of January 1995 with the formal status of an intergovernmental organisation. (Jackson, 1998, p162) The WTO gives a framework for the conduct of international trade in goods and services and for the safeguard of intellectual property rights by both administering and enforcing a set of international trading agreements, referred to as WTO agreements. These agreements are the ‘legal ground rules’ (WTO website) for international trade, negotiated and signed by most of the world’s trading nations. The agreements give the member countries of the WTO international trading rights and bind member governments to ensure that their trade policies are in keeping with set limits. ... The WTO is needed because all nations, whom have both perfectly competitive and imperfectly competitive markets, benefit from participating in international trade as opposed to being in autarky. A country which is in autarky is one that is self-sufficient and does not trade goods and services with other countries. ... e However, when a country opens up to international trade, it does so at a fixed international price ratio which is generally different from the domestic price ratio. ... The country has now gained from trade as a result of gains from exchange whereby consumer’s consumption shifts towards the relatively cheaper good X thus enabling them to consume on a higher CIC than in autarky. ... e In practise when a country engages in trade it will erect various barriers to restrict trade mainly in the form of taxes levied on imports of foreign goods. ... Furthermore, consumer prices have been distorted with the taxed good becoming relatively more expensive for consumers to buy, resulting in a partial loss of the gains from exchange previously enjoyed by consumers under free trade. As tariffs reduce the gains from trade for countries whom impose them, it is in the best interests of countries to lower them thus reducing their negative effect on national welfare. |
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Title: World Trade Organisation
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