Influence of the World Trade Organization (WTO)

Description:

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 is to reduce or abolish national trade barriers.

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.

1. 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