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| Sunday, 5 June 2005 |
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Junior Observer |  |
| News Business Features Editorial
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WTO watches over global trade
But, did you know that there is an international organisation to deal with the global rules of trade between nations? The World Trade Organization (WTO) is the only global international organisation dealing with the rules of trade between nations. The aim of the WTO is to help producers of goods and services, exporters, and importers conduct their business. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. Thanks to the WTO, consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them.The WTO ensures that there will be a more prosperous, peaceful and accountable economic world. All decisions in the WTO are taken by agreement among all member countries and they are approved by members' parliaments. Trade disagreements are channelled into the WTO's dispute settlement process. Their focus is on interpreting agreements and commitments, and ways to ensure that the countries' trade policies conform with them. Known as the multilateral trading system, the WTO's agreements are the legal ground-rules for international commerce. They also bind governments to keep their trade policies within agreed limits for everybody's benefit. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The WTO was set up on January 1, 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system.
Benefits of the WTO trading system The WTO and the trading system offer a range of benefits, some well-known, others not so obvious. The system helps to keep the peace - this sounds like an exaggerated claim, and it would be wrong to make too much of it. Nevertheless, the system does contribute to international peace, and if we understand why, we have a clearer picture of what the system actually does. The system allows disputes to be handled constructively - As trade expands in volume, in the number of products traded, and in the numbers of countries and companies trading, there is a greater chance that disputes will arise. The WTO system helps resolve these disputes peacefully and constructively. A system based on rules rather than power makes life easier for all- The WTO cannot claim to make all countries equal. But it does reduce some inequalities, giving smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of their numerous trading partners. Free trade cuts the cost of living - 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. It gives consumers more choice, and a broader range of qualities to choose from. Think of all the things we can now have because we can import them: fruits and vegetables out of season, foods, clothing and other products that used to be considered exotic, cut flowers from any part of the world, all sorts of household goods, books, music, movies, and so on. Trade raises incomes - lowering trade barriers allows trade to increase, which adds to incomes, national incomes and personal incomes. But some adjustment is necessary. Trade stimulates economic growth, and that can be good news for employment. Trade clearly has the potential to create jobs. In practice there is often factual evidence that lower trade barriers have been good for employment. But the picture is complicated by a number of factors. Nevertheless, the alternative protectionism is not the way to overcome employment problems.
The system encourages good governance - Under WTO rules, once a commitment has been made to liberalise a sector of trade, it is difficult to reverse. The rules also discourage a range of unwise policies. For businesses, that means greater certainty and clarity about trading conditions. For governments it can often mean good discipline. **** Fact file Location: Geneva, Switzerland Established: January 1, 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 148 countries Budget: 169 million Swiss Francs for 2005 Secretariat staff: 630 Head: Supachai Panitchpakdi (Director-General) Functions: * Administering WTO trade agreements * Forum for trade negotiations * Handling trade disputes * Monitoring national trade policies * Technical assistance and training for developing countries * Cooperation with other international organisations |
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| Politics | Produced by Lake House |
You must be knowing that traders are not allowed to sell products or
services without any rules. The government or a special organisation
appointed by the government will monitor and control all trade activities
in a country. This is mainly to regulate unfair trade practices. 
It did not take long for the General Agreement to establish an
unofficial, international organisation, also known informally as GATT.
Over the years GATT evolved through several rounds of negotiations.The
last and largest GATT round, was the Uruguay Round which lasted from 1986
to 1994 and led to the WTO's creation. Whereas GATT had mainly dealt with
trade in goods, the WTO and its agreements now cover trade in services,
and in traded inventions, creations and designs (intellectual property).
The system protects governments from narrow interests - The GATT-WTO
system which evolved in the second half of the 20th Century helps
governments take a more balanced view of trade policy. Governments are
better-placed to defend themselves against lobbying from narrow interest
groups by focusing on trade-offs that are made in the interests of
everyone in the economy. 
