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The World Trade Organization and the Global Economy - Term Paper Example

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This paper "The World Trade Organization and the Global Economy" focuses on the fact that the WTO is the international agency that handles the global trade rules between countries. Its primary task is to guarantee free trade. Producers are assured that they can benefit from stable flows of goods. …
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The World Trade Organization and the Global Economy
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Download file to see previous pages Decisions in the WTO are normally made through negotiation among all of its members and they are approved by the member countries’ legislatures.1 Trade conflict is handled through the dispute settlement system of the WTO where the emphasis is on making sure that trade policies of member countries comply with agreements. This paper argues that the WTO is a positive influence on the world economy.
By loosening trade restrictions, the WTO also eliminates other boundaries between countries and peoples. At the core of the WTO—called the multilateral trading system-- are the treatises, discussed and approved by most of the world’s trading countries, and signed in their legislative bodies. These treatises are the legal protocols for global trade.2 Basically, they are agreements, granting member countries major trade privileges. They also oblige these countries to conform to agreed trade rules to the benefit of everyone. The recent years have been very unstable and turbulent. Stock prices have plummeted, the financial sector has crashed, important commodities like oil have dropped severely and inflationary demands have become deflationary problems. The prospects since 2009 appear bleak, as the global economy is declining, the population of unemployed is growing, trade levels are dropping, and nobody is sure when the financial havoc will end.3 Global production is dwindling as rapidly as demand is declining and foreign direct investment keeps on dropping. In spite of some common declarations from world leaders about the threats of protectionism, it is actually rising in several nations, while public approval for trade liberalization is negligible among others.4 In such an environment, the issue should be raised whether trade liberalization remains vital.
The financial crisis clearly appears to be the more urgent concern, and trade has gradually recovered since the system of loosening trade barriers started with the establishment of the General Agreement on Tariffs and Trade (GATT) after the Second World War.5 Since its establishment, the WTO has carried on with the process of trade liberalization, and broadened the directive of the earlier GATT administration to include other trade-based issues, like intellectual property. Abolishing the WTO would be unreasonable. Trade policy is still essential, and it can serve a vital function in boosting the recovery of the world economy. The formation of the WTO reformed many of the original weaknesses of the GATT and created a strong institutional foundation from which the system of international trade could develop. The WTO had several accomplishments, such as China’s accession in 2001, and it is still one of the most important international agencies.
The Economic Advantages of the WTO
Distributive principles and efficiency concerns are generally shown as being in disagreement. Yet, they should not be. Making sure that every party gains from the liberalization of trade are rational from the point of view of economics. Enhanced trade heightens general wealth. Hence enhancing the production and consumption capacity of the poorest nations will result in greater boosts in general wealth. If distributing the wealth will strengthen trade liberalization, this is to the benefit of the nations that are already the frontrunners. Moreover, to the point the gains of trade are distributed, nations that would not have gained will have assets to use in the markets of other member countries and to improve the capacity of their peoples to create new resources or wealth.  ...Download file to see next pagesRead More
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