WTO (World Trade Organization)
10 things the WTO can do
The world is complex. The World Trade
Organization is complex. But it tries to reflect the complex and dynamic nature
of trade and the WTO’s trade rules. It highlights benefits of the trading
system, but it doesn’t claim that everything is perfect. Were it a perfect
system, there would be no need for further negotiations and for the system to
evolve and reform continually.
1. The WTO can cut living costs and raise
living standards
We are all consumers. The prices 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.
2 The WTO can 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.
3 The WTO can 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.
4 The WTO can 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.
5 The WTO can 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.
6 The WTO can help countries development
Underlying the WTO’s trading system is
the fact that more open trade can boost economic growth and help countries
development. 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.
7 The WTO can give the weak a stronger voice
Small countries would be weaker without
the WTO. Differences in 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.
8 The WTO can 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.
9 The WTO can 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.
10 The WTO can 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.
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