What is The World Trade Organization (WTO). Its main principles of activity Essay
What is The World Trade Organization (WTO). Its main principles of activity, 485 words essay example
Essay Topic: trade, activity, organization
The World Trade Organization (WTO) was established in 1993. The organization oversees international trade and ensures that its members adhere to the rules (McConnell et al., 2009). According to (WTO, 2016), the organization is member-driven and decisions are produced by negotiations between the member governments. The WTO supports non-discrimination policies in international trade, more open and Free Trade, increase predictability and transparency, additional competitive international trade, added benefits to developing countries, and a more sustainable approach to international trade (WTO, 2016). Thus, it appears that some principles of the WTO and Fair Trade related organizations coincide. However, they are based on different concepts of international trade. The WTO pursues Fair Trade while others lean towards Free Trade (Driesen, 2000).
The organization plays an important role in modern international trade. The WTO is based on multilateral trade agreements by setting certain standards. According to (Krugman et al., 2012), WTO replaced the General Agreement on Tariffs and Trade organization (GATT) and has been exposed to criticism from the very beginning. The WTO is based on the GATT trade principles. Many accuse the organization of being the world government (Krugman et al., 2012). As noted by (Krugman et al., 2012), the WTO's principles primarily apply to the trade in goods, while it has a weak stance on trade with services. This is a significant drawback of the organization. Beyond setting international trade rules, the WTO also acts as the dispute settlement body. The organization plays an extremely important role in the dispute resolution process. The WTO provides a more efficient option for international dispute settlement (Krugman et al., 2012 Driesen, 2014).
North American Free Trade Agreement (NAFTA)
Free Trade is closely associated with Free Trade agreements (FTA) that significantly liberalize economic relations among the member countries. One example of the FTA is the one created in North America. This is called the North American Free Trade Agreement or NAFTA. NAFTA has become a debated concept from the very beginning. NAFTA involved integration of two high-wage developed countries and one developing country. According to (Belous & Lemco, 1995), NAFTA has set a precedent in international trade. However, NAFTA has been widely criticized. As noted by (Muckleroy, 1994), opponents of the agreement claimed that NAFTA represented the interests of big business and would have a positive effect on economic growth. Furthermore, they argued that the agreement would lead to job losses. According to (Gerber, 2014), there were two additional issues illegal immigration from Mexico and drug violence in the country. On the other hand, supporters of NAFTA suggested that this was a logical and positive step forward to closer integration with neighboring countries (Muckleroy, 1994). As (Muckleroy, 1994) mentions, the agreement will have a modest positive impact for all member countries. The same conclusion is also suggested by (Belous & Lemco, 1995) who argue that trade liberalization will support more exports and investments to Mexico thereby improving the country's welfare. This, in turn, will lead to higher demand for the products from the U.S. and