10 Things the WTO Can Do...

The world is complex. The World Trade Organization is complex. In this small writing I would like to brief and to reflect the complex and dynamic nature of trade and the WTO’s trade rules. This summary has taken from the booklet of WTO, “10 things the WTO Can Do”, where right now the member of WTO are 150 state’s members. Of Crouse, in WTO has over 150 views or probably more than that.  

  • Cut living costs and raise living standards
We are all consumers. The price we pay for our food and clothing, our necessities and luxuries, and everything else in between, are affected by trade policies.

Protectionism is expensive: it raises prices. The WTO’s global system lowers trade barriers through negotiation and operates under the principle of non-discrimination. The result is reduced costs of production (because imports used in production are cheaper), reduced prices of finished goods and services, more choice and ultimately a lower cost of living.

Elsewhere, we look at the challenges that imports can present. Here the focus is on the impact on us, as consumers.

Food is cheaper if protection is reduced. When you protect your agriculture, food is artificially expensive. When protection is particularly high-as when market prices are naturally low-the impact can be huge. 

Clothes are cheaper. Like agriculture, trade in garments and textiles has been reformed although some protection remains. At times of peak protection, the costs to consumers were high.
  • Settle disputes and reduce trade tensions
More trade, more traded goods and services and more trading countries-they bring benefits but they can also increase the potential for friction. The WTO’s system deals with these in two ways. One is by talking: countries negotiate rules that are acceptable to all. The other is by settling disputes about whether countries are playing by those agreed rules.
  • Stimulate economic growth and employment
The relationship between trade and jobs is complex. It is true that trade can create jobs, but it is equally true that competition from imports can put producers under pressure and lead them to lay off workers.

The impact of competition from foreign producers varies across firms in a sector, across sectors of the economy as well as across countries. So does the impact of new trade opportunities.
  • Cut the cost of doing business internationally
Many of the benefits of the trading system are more difficult to summarize in numbers, but they are still important. They are the result of essential principles at the heart of the system, and they make life simpler for the enterprises directly involved in trade and for the producers of goods and services.
  • Encourage good governance
Transparency-shared information and knowledge-levels the playing field. Rules reduce arbitrariness and opportunities for corruption. They also shield governments from lobbying by narrow interests.
  • Help countries develop
Underlying the WTO’s trading system is the fact that more open trade can boost economic growth and help countries develop. In that sense, commerce and development are good for each other. In addition, the WTO agreements are full of provisions that take into account the interests of developing countries.
  • Give the weak a stronger voice
Small countries would be weaker without the WTO. Differences I bargaining power are narrowed by agreed rules, consensus decision-making and coalition building.

Coalitions give developing countries a stronger voice in negotiations. The resulting agreements mean that all countries, including the most powerful, have to play by the rules. The rule of law replaces might-makes-right.
  • Support the environment and health
An often-heard accusation is that the WTO system treats trade as the priority, at the expense of environmental and humanitarian objectives. This is untrue. Trade is nothing more than a means to an ends. It could never be more important than protecting the environment or raising the quality of life. What WTO agreements do is to try to make trade support the things we really want, including a clean and safe environment, and to prevent governments using these objectives as an excuse for introducing protectionist measures.
  • Contribute to peace and stability
This is an under-reported benefit of the WTO’s trading system. Trade helps to sustain growth. Trade rules stabilize the world economy by discouraging sharp backward steps in policy and by making policy more predictable. They deter protectionism; they increase certainty. They are confidence-builders.
  • Be effective without hitting the headlines

Negotiations and disputes are news-makers, but a lot of vital WTO work takes place out of the limelight to help trade flow smoothly, for the benefit of the world economy and for all of us.

Source: WTO, 10 Things the WTO Can Do.
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