Role of WTO in International Trade Development - Case Study Example

International Business Table of Contents Introduction 3 Analysis 3 Thailand and the World Trade Organisation 5 Recommendations 6 Conclusion 7 References 7 Introduction The World Trade Organization or WTO is an international body that deals with the rules of trade that govern different nations. The backbone of this organization lies with its agreements that have been framed in alignment with the negotiations made among the global trading partners. The decision of each country to abide by the rules laid by the WTO is ratified in their respective parliaments. The primary objective of this organization is to assist in the production along with the export and import of goods and services across the world. This project aims to bring forth the manner in which this organization has contributed to the development of international trade. It has been able to assure the producers as well as the consumers that they will be able to enjoy more secured services of goods and services. Contemporary consumers exercise a greater choice when it comes to commodities and services. It has also been able to assure the exporters and producers of goods and services that foreign market would always remain open for their products (World Trade Organization-a, p.2). Analysis The World Trade Organization has resulted in the development of a more successful, accountable and peaceful economic world. Decisions in the organizations are taken unanimously by the member countries. Moreover the decisions are ratified by their parliaments. The WTO has a very efficient way of settling disputes which has minimized trade frictions to a great extent. This has been achieved by carefully interpreting the agreements and ensuring that each country operates in conformance with trade policies. This results in less number of disputes and the chances of transforming themselves into military and political conflicts are also greatly reduces. The WTO was formed in 1995 as a successor of GATT, General Agreements on Tariffs and Trade, which was established after the Second World War. The multilateral system of trade was actually set by GATT but eventually taken over by WTO. Since then, the world has witnessed exceptional growth in international trade. Merchandise growth has increased by 6% on an average each year. The total trade valued in the year 2000 was 22 times of that valued in 1950. This success was the end product of a string of trade negotiations. Initially the focus was mainly on the reduction of tariffs. Later on, issues like anti-dumping and non tariffs barriers were also taken up (World Trade Organization-b, “The Multilateral Trading System-Past, Present and Future”). In the year 1997, 40 nations decided to enter tariff free trade for IT products. About 70 nations entered the financial services dealing, out of which 95% included services in banking, securities, financial information and insurances. In the year 2000, the organization took up works such as non agricultural tariffs, environment, rules pertaining to subsidies, anti dumping, competition policies, investments, trade facilitations and a wide range of other issues. It also took up issues that were raised by the developing countries regarding their difficulty to abide by the agreements presented by the WTO. The organization’s main objective was to ensure that trade processes are fair and practical. The WTO has laid down a number of agreements resulting from negotiations among member countries. The present set of negotiations has resulted from the “1986-94 Uruguay Round negotiations which included a major revision of the original General Agreement on Tariffs and Trade (GATT)” (World Trade Organization-c, “WTO Agreements”). WTO is said to be the principal follower of the rules and policies laid down by GATT. A number of new rules were also created for trade and services, intellectual property rights, trade policies and dispute settlements. These agreements have resulted in the development of a trading system which is completely fair and non discriminatory. Each member country is guaranteed that its products and services would be treated consistently and fairly in the importing country. The same guarantee is also provided to the importing country. The new set of policies has also made provisions for a certain amount of flexibility for the developing nations to help them operate freely. The WTO has laid down special rules for trade in the field of creativity and ideas. It has specifically designed rules to protect intellectual property during trade. Most importantly, the organization has laid down rules for the settlement of disputes among trading partners. This is to ensure that no hindrances are caused while trading and that the process happens smoothly. The system helps to resolve disputes through consultations. In the event of failure of system of consultation, the WTO has laid down a ‘stage by stage’ procedure including a group of experts to provide judgment on any trade related matter. The WTO has specifically assisted the developing and the less developed countries. It has given them special provisions which include longer time for implementing agreements, and such measures which may help them to increase opportunities of trading. It has also designed measures for safeguarding the interest of each member country. A special meeting was held in 1997 to provide technical assistance and trade initiatives to countries which are very less developed. This meeting was undertaken by a number of intergovernmental agencies with a view to support the less developed nations so as to develop their trading abilities and also to provide such agreements which would help them in increasing their market access. Thailand and the World Trade Organisation Thailand has been one of the member nations of the WTO since 1995. WTO has been instrumental in the kingdom’s progress towards liberalization of trade, public sector restructuring and strengthening of its financial system. Thailand has made rapid progress in investment and trade liberalization target. The WTO aims at reducing trade barriers in countries and promotes free flow of goods and services among the economies of the Asia Pacific region. The Government of Thailand has been working towards strengthening its domestic economy as well as integrating itself with the world economy by increasing its exports and diversifying its market. WTO has tried to improve Thailand’s position in the world economy by reducing import tariffs on farm products and export subsidies which are responsible for distorting global prices of farm products. The WTO has also been encouraging the developing nations to form alliances with themselves in order to improve their bargaining power in the world market. Thailand’s recent collaboration with Brazil and Australia in challenging export subsidies on sugar in Europe has been successful in keeping the price of sugar under control by 40% (CID, “Thailand Summary”). Recommendations It is recommended that the organization should formulate special policies for administering the trade agreements. Mere formulation of agreements is not sufficient if they are not properly implemented. There should focus more on the problems faced by the less developed nations as they are financially weaker in comparison to the developed ones. Because of their weaker financial status they are more likely to be defeated and cheated by their stronger competitors. It is also recommended that participation of each country is made mandatory while formulating the policies. This would reduce biasness and discrepancies. It should be ensured that the agreements should not go in favor of some nations and against some nations. The trade policies should also be revised on a regular basis. This is because the global economic conditions are in a state of constant flux which has its implication on each country. If any of the agreement fails and proves to have a damaging effect on a particular nation, WTO should take ownership and compensate for the loss. Conclusion Thus it is clear that the WTO has assisted in the development and growth of worldwide trade. It has been the major factor behind market development and is essential for the growth and development of nations. Globalization has made it imperative to collect extensive market information before making critical decisions in business and trade. The WTO has been a major contributor in this field. It has specially helped in the marketing and development of exports, national trade and international trade in global markets. Further it has helped to develop healthy relations between the trading partners. Developing countries have specifically gained from the agreements laid down by the body. It has helped to remove all biasness and unfair practices related to trade in the global market. Apart from this, it has ensured the building up of a mutually beneficial relationship between the trade partners. This has been the key reason behind the consistent growth and development of international trade. It has successfully addressed numerous issues confronting developing and developed nations in the world. Finally it has contributed towards the development of a globally cooperative environment along with the well being of a number of nations. References CID. Thailand Summary. Global Trade Negotiations. No Date. September 21, 2010. World Trade Organization-a. The World Trade Origination. 2009. September 18, 2010. World Trade Organization-b. The Multilateral Trading System-Past, Present and Future. The World Trade Origination. 2009. September 18, 2010. < http://www.wto.org/english/res_e/doload_e/inbr_e.pdf> World Trade Organization-c. WTO Agreements. The World Trade Origination. 2009. September 18, 2010. < http://www.wto.org/english/res_e/doload_e/inbr_e.pdf> Read More