WTO and International Trade - Example

Running Head: WTO and International Trade Government participation in International Trade Name Institution Date Table of Contents 1.0 Introduction....................................................................................................................3 2.0 WTO Principles...............................................................................................................3 3.0 Challenges faced by WTO...........……...........................................................................3 4.0 Government involvement in International trade...………….........................................4 4.1 Trade policy formulation................................................................................................4 4.2 Laws and Regulations of trade..……............................................................................5 4.3 Trade policy objectives….…………………..................................................................6 4.4 Trade agreements and arrangements..............................................................................6 5.0 Advantages of WTO......................................................................................................6 6.0 Future Challenges......……………….............................................................................7 7.0 Conclusion….................................................................................................................8 References…………………………………………………………………………….9 WTO and International Trade 1.0 Introduction The World Trade Organization (WTO) was founded in 1995 after several talks in Uruguay. It followed the General Agreement on Tariffs and Trade (GATT) that came into existence in 1948 with the intention to reduce trade barrier in the international market. WTO has a greater scope of operations which include agriculture, intellectual property, services and trade in goods. WTO’s primary goal is to enhance free trade through well established rules that govern international trade (Emerson, 2011). Unfortunately the body has been faced with a lot of controversy as it is seen to be controlled by the interests of the rich countries, thus receiving a lot of criticism. 2.0 WTO Principles According to Emerson, (2011), WTO is guided by a number of principles as it carries out its mandate in the international trade. The principle of non discrimination states that both the foreign and national companies are to be treated equally, and it is not acceptable to favor domestic companies and undermine foreign companies. Another principle is reciprocity where all nations are required to offer similar concessions for all participants in international trade. The principle of Transparency under WTO provides that all processes and negotiations in the trade must be seen to be open and fair by nations with equal rules for all. WTO is also guided by the principle of Special treatment. This principle appreciates the fact that developing countries may need differential treatment due to historic imbalances in trade. 3.0 Challenges faced by WTO With the existence of the above principles, it is certain that most nations in the world believe that they commitment to the WTO. However, WTO has been criticized by several groups for various things, and this is challenging to the body. WTO is criticized for being welcoming to only large corporations, and failing to promote adequate public participation in matters of international trade. Some nations have laws on safety and protection of their nationals’ health, economies and environments which are considered to be barriers to free international trade (Emerson, 2011). This is a contradiction to the principle of equality and non discrimination in international trade. Several countries criticized WTO arguing that there need to be enough co-operations between the rich and developing nations as they participate in the international trade. 4.0 Government involvement in International trade The rules of WTO acknowledge the need to increase freedom of international trade through well established trade agreements. National governments enter into trade agreements that fall within the benchmarks set by the WTO. Government transparency has led to improvement in the agenda of economic reform in nations, and most of it concerns unilateral trade liberalization. There is increased need for governments to participate in negotiations related to regional trade agreements (Cooper, 2010). The council of Australian Governments facilitates cooperation, consultation and coordination of policy between territories and states in order to avoid the likely inconsistencies as far as international trade is concerned. 4.1 Trade policy formulation Different nations have well established trade policy formulations mechanisms which comprise of the executive body of government, business consultants, non-governmental organizations, advisory bodies, and relevant stakeholders. The Foreign Affairs department are responsible for signing international treaties that involve trade policies and agreements, commodity negotiations, international trade, and trade promotion. The government has consultative mechanisms that advices her on investment issues and international trade (Cooper, 2010). In Australia, the Export Advisory Panel was formed to facilitate the advantages of free trade agreements. It does this by advising on how to implement access to international markets, and identifying potential investment opportunities which arise from trade agreements. The government uses its taskforces to make inquiries on issues related to international business in order to avoid uncertainties. Government transparency has greatly promoted economic reforms, and contributed to the continuation of international business relations among nations, who operate under the rules of WTO. 4.2 Laws and Regulations of Trade Trade laws in Australia are based on statutes and implementation policies. Just like other nations, it must domestically enact the international treaty requirements together with the WTO agreements so as to enforce the law. According to Cooper, (2010), most governments are committed to reviewing and adjusting laws that are likely to restrict competition, in order to allow free trade between nations to the benefit of their domestic investments. Legislative review program play a major role of eliminating barriers to competition, and also to promote efficiency in economic activities within and across the borders. Governments of different nations in WTO insist on cooperation, and this helps to facilitate regulatory reforms, and to reduce the red tape. The cooperation is also intended to increase the efficiency of established and amended regulations that would otherwise lead to unnecessary compliance costs when carrying out international business transactions. 4.3 Trade Policy Objectives There is a strong relationship between economic performance, trade openness and the standard of living of citizens in a nation. It is in this respect that national governments formulate trade policy agendas that are aimed at improving market accessibility for the nations' export goods and services, as they create jobs and various trade opportunities to sustain their economies. The biggest trade policy priority for Australia is realize complete the Doha Round in the most successful way possible. It is a significant accomplishment to Australia since it has enhanced access to international market by the nation's exporters. Most governments in WTO tend to focus much on regional and bilateral trade agreements since they believe that they result to easier and quick access to market than if they engaged in multilateral agreements. In fact regional trade agreements are used to compliment multilateral arrangements in international trade (Cooper, 2010). 4.4 Trade agreements and arrangements Through trade agreements, governments seek to reduce both tariff and non-tariff barriers of trade to products and services they exchange on the international market. The government of Australia focuses on improving the disciplines on RTAs so as to benefit the parties in the agreement, and to enhance global liberalization today and in the future. Governments recognizes the WTO dispute resolution mechanism as important in promoting an equitable, open, and enforceable international relationship between nations (Cooper, 2010). This is beneficial to multinational companies since they are able to trade on international market without having to face many challenges from their trade partners. 5.0 Advantages of WTO The WTO brings different nations together despite the complex the dynamic nature of trade across the continent. There are a number of benefits associated with the system, which makes governments to proudly maintain strong relationship with it around the world. one of the advantage is that WTO helps trade to move smoothly, and it also provides nations with the best mechanisms to resolve disputes (Emerson, 2011). The system has created and reinforced international confidence and the spirit of cooperation. In the past trade disputes transformed into war due to lack of understanding among nations. For instance, the 1930s trade wars occurred when countries competed over raising trade barriers to guard domestic producers from exploitation. Regional trade agreements between governments has created confidence, and this has contributed to peaceful relationships among nations. Another advantage is that the WTO system reduces trade barriers, encourages negotiations, and recognizes the non-discrimination principle (Emerson, 2011). The implication is that the cost of production goes down due to importation, and also the prices of finished products and services are reduced, hence low cost of living. However, governments are still concerned with the role of agricultural policies in relation to environmental protection, and food security. 6.0 Future challenges Despite the numerous benefits associated with free trade. WTO has to continue to maintain its credibility by ensuring that its rights and obligations are in line with the arising challenges due to increase in economic activities and globalization. the WTO has to ensure that multilateral and regional trade reforms complement each other, enhance new trade liberalization, expand its agenda to new level, and promote its institutional reforms. Member countries are also supposed to develop initiatives to address these issues for a smooth international trade (Cooper, 2010). 7.0 Conclusion The paper indicates the World Trade Organization (WTO) is an international body the brings nations together in trade. The body not only deals with trade in goods and services, but also engages in agricultural and intellectual property issues among others. The paper also indicates that WTO is guided by the principles of non-discrimination, reciprocity, special and differential treatment, and transparency. However, some of the principles are seen to contradict given the laws that exist in some nations. From the report, it is evident that governments are effectively used in the international trade for the benefit of their economies. The governments take part in the trade through well established trade agreements and policies that help to promote good international relations. Although free trade is associated with several advantages like promoting peace among nations, and reduced cost of living, the WTO and governments have a challenge to ensure continued international business relations among members. References Cooper, W. H. (2010, February). Free trade agreements: Impact on US trade and implications for US trade policy. Library of Congress Washington DC Congressional Research Service. Emerson, C. (2011). Gillard Government trade policy statement: Trading our way to more jobs and prosperity. Department of Foreign Affairs and Trade Canberra, 12. Read More