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By the end of this section, you will be able to:

  • Explain the origin and role of the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT)
  • Discuss the significance and provide examples of regional trading agreements
  • Analyze trade policy at the national level
  • Evaluate long-term trends in barriers to trade

These public policy arguments about how nations should react to globalization and trade are fought out at several levels: at the global level through the World Trade Organization and through regional trade agreements between pairs or groups of countries.

The world trade organization

The World Trade Organization (WTO)    was officially born in 1995, but its history is much longer. In the years after the Great Depression and World War II, there was a worldwide push to build institutions that would tie the nations of the world together. The United Nations officially came into existence in 1945. The World Bank, which assists the poorest people in the world, and the International Monetary Fund, which addresses issues raised by international financial transactions, were both created in 1946. The third planned organization was to be an International Trade Organization, which would manage international trade. The United Nations was unable to agree to this. Instead, the General Agreement on Tariffs and Trade (GATT)    , was established in 1947 to provide a forum in which nations could come together to negotiate reductions in tariffs and other barriers to trade. In 1995, the GATT was transformed into the WTO.

The GATT process was to negotiate an agreement to reduce barriers to trade, sign that agreement, pause for a while, and then start negotiating the next agreement. The rounds of talks in the GATT, and now the WTO, are shown in [link] . Notice that the early rounds of GATT talks took a relatively short time, included a small number of countries, and focused almost entirely on reducing tariffs. Since the 1970s, however, rounds of trade talks have taken years, included a large number of countries, and an ever-broadening range of issues.

The negotiating rounds of gatt and the world trade organization
Year Place or Name of Round Main Subjects Number of Countries Involved
1947 Geneva Tariff reduction 23
1949 Annecy Tariff reduction 13
1951 Torquay Tariff reduction 38
1956 Geneva Tariff reduction 26
1960–61 Dillon round Tariff reduction 26
1964–67 Kennedy round Tariffs, anti-dumping measures 62
1973–79 Tokyo round Tariffs, nontariff barriers 102
1986–94 Uruguay round Tariffs, nontariff barriers, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO 123
2001– Doha round Agriculture, services, intellectual property, competition, investment, environment, dispute settlement 147

The sluggish pace of GATT negotiations led to an old joke that GATT really stood for Gentleman’s Agreement to Talk and Talk. The slow pace of international trade talks, however, is understandable, even sensible. Having dozens of nations agree to any treaty is a lengthy process. GATT often set up separate trading rules for certain industries, like agriculture, and separate trading rules for certain countries, like the low-income countries. There were rules, exceptions to rules, opportunities to opt out of rules, and precise wording to be fought over in every case. Like the GATT before it, the WTO is not a world government, with power to impose its decisions on others. The total staff of the WTO in 2014 is 640 people and its annual budget (as of 2014) is $197 million, which makes it smaller in size than many large universities.

Questions & Answers

What will be the multiplier, when MPS is 0, 0.4, 0.6, and 1? What will it be when the MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by $8 billion and the MPC is 0.80? And If the MPC is 0.67?
Ayesha Reply
what are the side effects of government policies
narayan Reply
Government policy can influence interest rates, a rise in which increases the cost of borrowing in the business community. Higher rates also lead to decreased consumer spending. Lower interest rates attract investment as businesses increase production.
REHMA
if there is a negative technology shock to the economy in short run the firms production cost will go up and labor goes down and thus consumption and production will be lower than before. the government can spend to create jobs and central Bank can lower the interest rates
Dine
what are marlet prices
Jaheim Reply
price which includes net indirect taxes
Anish
what is aggregate demand
Kalkidan Reply
what is micro economics
A-dip Reply
microscopic study...
REHMA
microeconomics is study of individual, household and firms of division making and allocation of resources.
himanshi
absolutely
Shahzaib
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Thi
Join me in Vietnam
Thi
cũygi👅
Thi
what a pure economics. must have downloaded by mistake.
Zaiveisho
microeconomics is the study of an individual unit in an economic system or an household
DAMIAN
what really cause inflation?
Urey Reply
what is trade deficit
vivek Reply
is ther forgon alternative. is the amount sacrifice of one thing to gain another thing
Alie
what is enflation rate?
Mohibullah Reply
Is it inflation rate sir
Bilal
yes
Mohibullah
This is the annual rate of increase of basic household goods and services and measures also the cost of living and doing business in a country. it's a important information when making for forecast or business plans.
this is continuous increase of overall price level
Bethwel
the betewen microeconomics and macroeconomics is microeconomics is concerned with individual scarcity like household,workers and so on while macroeconomics is focuced on the problème winth organisation the collaboration with others companies the profits and then the growth of the organisation
Amadou Reply
what is tax base
ekwuye Reply
The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority.
Mare
what is economic system
Alinda Reply
Quantity of Gasoline in millions was?
Touseef Reply
1000cubic meter
Keyrene
definition of phillips curve
Alok Reply
what is closed economy
Nati Reply
an economy that is not open
Chris
meaning: The economy is a closed system, there is not trade between this economy and another one, so no shared market. just a system with no outside influences.
Chris
thanks
Nati
what are the decision-making unit of an economy..?
Nati
an economy which is not involved in exchange with foreign countries
Manjisha
what is the demand curve
Cabdiqani Reply
it is the graph of aggregate demand in a market
Chris
the demand curve is a graph showing the quantity demand and price and the numbers and numbers of units at various quantity demanded
Paitience
' it is a diagram with two axes one represent price, the other represents quantity demanded. the curve slops downwords from left to right interpreting the Law of demand (reversed proportion between price and demand ) The higher the price the lower the demand..
Isameldin
What is DMU and how affects demand?
Isameldin

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Source:  OpenStax, Macroeconomics. OpenStax CNX. Jun 16, 2014 Download for free at http://legacy.cnx.org/content/col11626/1.10
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