World Trade

Organization
(WTO)
 WTO is the only international
organization dealing with the global
rules of trade between nations.
Its main function is to ensure
that trade flows as smoothly,
predictably and freely as possible
The goal is to help producers of
goods and services, exporters, and
importers conduct their business.
 Benefits of WTO

The system helps promote peace

Disputes are handled constructively
Rules make life easier for all
Free trade cuts the costs of living
It provides more choice of products
and qualities
Trade raises incomes
Trade stimulates economic growth
 The system helps promote
peace
Click to edit Master text styles Helping trade to
•

Second level flow smoothly, and

● Third level

● Fourth level

● Fifth level
Providing
• countries
with a constructive
and fair outlet for
dealing with
disputes over trade
issues.
 Disputes are handled
constructively
•Around 300
Click to edit Master text styles disputes have been
Second level brought to the WTO
● Third level
since it was set up
● Fourth level
in 1995.
● Fifth level

Without a means of
•

tackling these
constructively and
harmoniously, some
could have led to
more serious
political conflict.
Rules make life easier for all
• The WTO
agreements were
Click to edit Master text styles negotiated by all
Second level members, were
● Third level

● Fourth level
approved by
● Fifth level
consensus and
were ratified in all
members’
parliaments.
• The agreements
apply to everyone.
•Rich and poor
countries alike have
an equal right to
challenge each
 Free trade cuts the costs of
living
Click to edit Master text styles
Second level There are plenty of
● Third level studies showing just
● Fourth level
what the impacts of
● Fifth level
protectionism and of
freer trade are.
• Food is
cheaper
• Clothes are
cheaper
• The same goes

for other goods

and services.
More choice of products and
qualities
Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level

•fruits and vegetables out of season,

•foods, clothing and other products that used to be

considered exotic,
•cut flowers from any part of the world,

•all sorts of household goods, books, music,

movies, and so on.

 Trade raises incomes
Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level

Lowering trade barriers allows trade to

increase, which adds to incomes —
● National incomes and

● Personal incomes.
Trade stimulates economic
growth
Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level

•Trade clearly has the potential to create jobs. In

practice there is often factual evidence that
lower trade barriers have been good for
employment.
•But the picture is complicated by a number of

factors. Nevertheless, the alternative —

protectionism — is not the way to tackle
employment problems.
The basic principles make
life more efficient
Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level

•Many of the benefits of the trading system

are more difficult to summarize in numbers,
but they are still important.
•They are the result of essential principles at

the heart of the system, and they make life

simpler for the enterprises directly involved
in trade and for the producers of goods and
services.
 Governments are shielded
from lobbying
Click to edit Master text styles The GATT-WTO system
•

Second level which evolved in the

● Third level second half of the 20th
● Fourth level Century helps
● Fifth level
governments take a
more balanced view of
trade policy.

•Governments are
better-placed to defend
themselves against
lobbying from narrow
interest groups by
focusing on trade-offs
that are made in the
 The system encourages
good government
Click to edit Master text styles
The
• rules reduce
Second level
● Third level
opportunities for
● Fourth level
corruption
● Fifth level

Particular types of trade

•

barriers cause additional

damage because they
provide opportunities for
corruption and other
forms of bad
government.
 Misunderstandings
Click to edit Master text styles
Second level
● Third level The debate will
•

● Fourth level probably never

● Fifth level end.

Small
• countries
are powerless in
the WTO

Weaker countries
•

are forced to join

the WTO
Click to edit Master text styles
Second level • WTO Dictates ?
● Third level

● Fourth level

● Fifth level
The WTO does NOT tell
•

governments what to do

The WTO does not tell

•

governments how to
conduct their trade
policies. Rather,

it’s a “member-driven”
•

organization.
 • Blindly for trade ?
Click to edit Master text styles
Second level •The WTO is NOT for free
● Third level

● Fourth level
trade at any cost
● Fifth level
•Yes, one of the principles

of the WTO system is for

countries to lower their
trade barriers and to
allow trade to flow more
freely.

After all, countries benefit

•

from the increased trade

that results from lower
 Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level

•Wreaks jobs ??
•The WTO does NOT destroy jobs or widen the

gap between rich and poor

•Trade can be a powerful force for creating jobs

and reducing poverty. Sometimes adjustments

are necessary to deal with job losses, and here
the picture is complicated. In any case, the
alternative of protectionism is not the solution.
Weak forced to join ??
Most countries do feel that it’s better to be in
the WTO system than to be outside it. That’s
why the list of countries negotiating
membership includes both large and small
trading nations

Undemocratic ??
Decisions in the WTO are generally by
consensus. In principle, that’s even more
democratic than majority rule because no
decision is taken until everyone agrees
Click to edit Master text styles
Second level
● Third level

● Fourth level

● Fifth level