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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

how to calculate opportunity cost
Vernon Reply
what is supply
Ntwanano Reply
Supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers.
DNA
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Anarfi
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Bahbit Reply
the following table shows the cost and revenue data for Molly the monopolistic
Chasha Reply
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aminu Reply
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Yasir Reply
Economics is a social science
Azka
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AZ
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Yasir
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Yasir
prefectly elastic demandis equal to dash?
Yasir
study related to what ought to be is termed as dash analysis?
Yasir
Whearas economics is a purely social science according to the Austrian School of Economics
Omkar
economic is a social science
falodun
economics is a social science
Anarfi
Economics is...... How to utilise scarce resources so that our unlimited wants are satisfied
Danish Reply
what is economics
Emmanuel Reply
economics is a science in which we can study problems related to human 's resources,need,lives, financial condition etc.
Sharma
Economic is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behavior and interactions of economic agents and how economies work.
Malaika
economics is that kind of subject which solve the economic problems like problem of scare resources center problem of an economy ( what how and from whome to produce) problem of inflation , deflation unemployment problem and other economic problems
Wani
Economics is the study of how society allocates it's scarce resources to fill their endless wants(according to Chicago school of Economics)
Omkar
Economics is the study of human action and its effects on other individuals and furthermore, society as a whole(Austrian School of Economics)
Omkar
The aggregation of the agents which interact in the form of economic activities is known as an economy
Omkar
name and explain the two rules of profit maximization
Esihle Reply
what is,elasticity
Onome Reply
Marginal utility of money remains the same. it is the assumption of
Anas Reply
Marginal utility of money remains the same. it is the assumption
Anas
Marginal utility of money remains the same. it is the assumption
Anas
marginal utility of money remains constant and as it is the worth of money , therefore it is assumed or we can say ,it is defined by the consumer himself...
mir
Marshall's demand theory
Avnish
Equilibrium of price is one at which the amount demand is exactly equal to the amount supplied explain
Mirza Reply
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Rida Reply
what is percentage method in elasticity
Ngongang Reply
Electricity – run cars are introduced and used in the country.
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Source:  OpenStax, Microeconomics. OpenStax CNX. Aug 03, 2014 Download for free at http://legacy.cnx.org/content/col11627/1.10
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