The WTO’s Role in Ensuring Smooth, Predictable and Free Flow of Trade
The World Trade Organization (WTO) is the only international organization that deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
The WTO was established in 1995 as a result of the Uruguay Round negotiations. The WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), was created in 1948. The GATT was a set of rules governing international trade in goods. In 1986, the GATT was supplemented by the General Agreement on Trade in Services (GATS), which covers trade in services.
The WTO also oversees the agreements on intellectual property rights ( TRIPS ) and on technical barriers to trade ( TBT ). These are known as the WTO’s “plurilateral” agreements, because not all WTO members have signed them.
2. WTO’s Role of Ensuring Smooth, Predictable and Free Flow of Trade
The smooth, predictable and free flow of trade is essential for the global economy to function properly. The WTO plays a vital role in ensuring this by:
2. 1 WTO’s Role in Reducing Trade Barriers
One of the WTO’s main functions is to reduce trade barriers between its members. Trade barriers are measures taken by governments to restrict or regulate international trade. They can take many forms, such as tariffs (taxes on imports), quotas (quantitative restrictions on imports), and non-tariff measures (e.g. licensing requirements, health and safety standards).
The WTO seeks to reduce trade barriers through a process of negotiation among its members. This process is known as “trade liberalization”. The ultimate goal of trade liberalization is to create a “free trade” environment in which there are no impediments to the flow of goods and services between countries.
2. 2 WTO’s Rule-Making Function
Another key function of the WTO is to establish rules governing international trade. These rules are contained in a number of multilateral agreements that have been negotiated and concluded among the WTO’s member governments.
The most important of these agreements are the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS). The GATT sets out the rules for international trade in goods, while the GATS sets out the rules for international trade in services. Other important WTO agreements include those on intellectual property rights (TRIPS) and technical barriers to trade (TBT).
2. 3 WTO’s Function of Managing Disputes Between Members
Another key function of the WTO is to provide a mechanism for resolving disputes between its member governments. When a dispute arises, the parties to the dispute must first attempt to resolve their differences through bilateral consultations. If they are unable to do so, they may request that the matter be referred to the WTO Dispute Settlement Body (DSB).
The DSB is composed of representatives from all WTO member governments. It acts as an impartial panel that hears arguments from both sides and renders a decision based on international law. Once a decision has been reached, it is binding on both parties and must be implemented within a specified period of time.
The WTO plays a vital role in ensuring the smooth, predictable and free flow of trade between its member countries. It does this by reducing trade barriers, establishing rules governing international trade, and providing a mechanism for resolving disputes between its members.
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