Last Updated 27 Mar 2020

World Trade Organization Changing Global Economy

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Global trading has been a part of the world since the 1940s. As trade between countries began to grow so did the need for some sort of international commerce. In 1948, the International Trade Organization (ITO) was established, but fell through and triggered the creation of General Agreement on Tariffs and Trade (GATT). GATT was created through several negotiations, known as rounds.

For many years, GATT's policies held strong and offered many countries the international support they needed to remain prosperous in global trade. Though, as time went on, certain trade policies established by GATT were being undermined by countries in order for them to continue conducting business. GATT's rules and regulations were becoming obsolete in the rapid changing global economy. "By the early 1980s the General Agreement was clearly no longer relevant to the realities of world trade as it had been in the 1940s.

For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services - not covered by GATT rules - was of major interest to more and more countries, and international investment had expanded" (World Wide Web. http://www. wto. org/wtoabout/facts1. htm). The eighth round (Uruguay Round 1986-1994) was the most recent and thorough of them all. The Uruguay Round had 125 countries participating, it is the largest trade negotiation to ever take place.

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Though this round was expected to fail from the start, it actually started some of the largest trade reforms since GATT and WWII. This round, lasting some 7 1/2 years, established the World Trade Organization (WTO) and a new set of agreements. The World Trade Organization was enacted on January 1, 1995. There are three main purposes of the WTO stated in the WTO web site. These three main goals are to help trade flow as freely as possible, serve as a forum for trade negotiations, and deal with dispute settlements.

How the WTO remains so effective is by setting up universal guidelines for members to follow and enforcing them. One of the most important changes made in WTO, is the addition of the trade rules regarding trade in intellectual property and services, as well as, products. The WTO site is currently discussing many articles. There are a few which strike my interest such as the EC and U. S. banana dispute which we had previously discussed in class, the increase of WTO members to 134, and the intellectual property proposal concerning the US and Japanese idea for a multilateral system and registering geographical locations.

There is an article on low income developing countries in the GATT/WTO framework, which is planning on discussing special provisions that should be offered to these under-developed and developing countries, which were involved in the Uruguay Round Agreements. "Developing Countries comprise the majority of the membership of the World Trade Organization. On the other hand, the European Communities, the United States, and other industrialized countries enjoy the greatest shares of international trade" (World Wide Web. ttp://www. wto. org/).

The Dispute Settlement Body (DSB) is the "law" of the WTO. It is the body in the WTO that analyzes the trade policies and interprets the rules regarding them. Two of the three sites we were advised to use on this paper were not accessible, so I just improvised and used Internet sites that had similar information on them. One of the articles I found on worker's rights was very informative. It discussed the U. S. Secretary of Labor, Alexis Herman, and the ties of core labor standards.

Last June, a declaration was announced in Geneva by the International Trade Organization (ILO). The International Labor Conference, held by ILO members, adopted this declaration with intentions of creating a stronger protection on core rights of workers, and holding each country accountable for this protection. On May 18, President Clinton Made a speech stating that the ILO and WTO need to maintain a working relationship in order to advance the global trading system while protecting the worker's basic rights.

This is a big step forward for the ILO and its members as we enter the 21st Century. With the passage of this Declaration, the ILO has underlined and clarified the importance of the fundamental rights of workers in an era of economic globalization" (Statement by Secretary Herman). Some of the current trade disputes discussed in the WTO are the disputes going on about the bananas between the United States and the European Communities. This dispute is actually being talked about this week in the Wall Street Journal.

Both sides are frustrated. The U. S. is because they feel the EU has unfairly made loop holes in WTO guidelines, and the EU is upset because they say the U. S. is trying to control too much of their rights as global traders. The U. S. has stated that the EU has been purposly avoiding banana purchases in Latin America, and doing business in areas like Africa, where Europe has many ties. The WTO has the responsibility to work on a plan that will hopefully satisfy both parties to some degree, but the U. S. as strong opinions of implementing 520 million dollars worth of tariffs on EU imports into our country.

Another dispute that is taking place is the Korean acoholic beverage tax. This is a matter the WTO is also trying to fix. The U. S. and EC don't agree with the tax that Korea is implementing on their imported alcoholic beverages. Again, the WTO pages website is inactive so I found some information in another forum about certain issue which are being reviewed. One of the hottest items right now seems to be assistance for low-income developing countries.

Many changes are taking place for developing countries, and the way they are conducting their international business. For one, they are aborting many of their uses of tariffs on infant companies to try and support growth. Secondly, they are altering their management to make themselves more attractive to foreign investment, which in turn will increase foreign direct investment and help create more supportive trade balances. These developing nations are strongly advised to take part in the WTO, so they can reap the benefits it has to offer.

The WTO, with its multilateral trade view, simply allows smaller economic powers to be more fairly involved in world trade without being victimized and taken advantage of by stronger economic powers in the old bilateral style of global trading. In the 21st Century global trading will be more fine-tuned than it is right now. We should see the elimination of tariffs, subsidies, quotas, etc. The world should be working like a large country, with open markets in every nation. Comparative advantage will establish itself, and trade balances will be less drastic.

Under-developed and developing countries will become developed. In my View, I think that in the 21st Century, the world will operate as one large entity in the aspects of economic markets. Though, the creation of the WTO brought many great new ideas and helped closer unite the world into one huge market, there are still bugs that need to be worked out, and as time goes on, we will see need for more changes and adjustments. A few of the areas that the WTO needs to rectify and further develop now are areas such as worker's rights, environmentalism, and foreign direct investment.

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World Trade Organization Changing Global Economy. (2018, Jun 18). Retrieved from https://phdessay.com/world-trade-organization-changing-global-economy/

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