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
  • 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.