World Trade Organisation
The World Trade Organisation is responsible for trying to promote and regulate free trade agreements between countries. All almost countries are a member of the WTO.
Ideal Trade
According to the WTO, ideal trade would be:
- Non-discriminatory
- Countries are not allowed to have informally have free trade with one country but strong protections against another
- Everything agreed between countries should be formal
- Free from barriers - no protectionism
- Predictable
- So that countries can foster investment and job creation and businesses can flourish
- Promoting fair competition
- The WTO will allow for "fair" competition, e.g allow Infant Industries to grow
- Protectionism only when needed then taken away
- For trade to be beneficial to developing countries
- Allow special provisions for developing countries
Roles & Functions of the WTO
- Set and enforce rules on international trade
- Resolve Trade Disputes
- WTO steps in instead of countries retaliating against eachother i.e tariff war
- Provide a forum for negotiating trade liberisation
- Gives a way for multi-country agreements to simultaneous reducing of protectionism
- Negotiations take place in Geneva
- Gives a way for multi-country agreements to simultaneous reducing of protectionism
- Monitor trade liberalisation
- Make sure free trade agreements are honored
- Increase transparency of the decision making process
- Member states understand how the decision has come about
- Member states can critique the WTO for their decisions
- To help developing countries fully benefit from global trade
- Cooperate with other major economic institutions e.g I.M.F
Criticism
The WTO has been criticised for benefitting developed countries more as Free Trade benefits developed countries much more than LDCs.