• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Evaluate the success of the WTO and the GATT in tariff reduction.

Extracts from this document...


Economics Homework Evaluate the success of the WTO and the GATT in tariff reduction. Economic theory suggests that free trade is likely to benefit countries. By allowing each country to specialise, production will take place in locations which enjoy a comparative advantage. World trade expanded m the 19th century but the first half of the twentieth century saw a fall in trade. This was partly caused by the economic disruption of two world wars. The Great Depression of the 1930s also led countries to adopt deeply protectionist policies. Governments mistakenly believed that by keeping foreign goods out, they could save domestic jobs. In practice, all countries adopted the same mix of measures. World trade collapsed, jobs were lost in export industries and consumers were left having to pay higher prices to inefficient domestic producers when before they could buy goods from overseas at cheaper prices. After the Second World War, there was a general recognition that these protectionist policies had been self-defeating. ...read more.


These measures to promote free trade were a powerful influence in expanding trade in the post-war period. World merchandise export volumes (manufacturing, agricultural and mining products) rose three times as fast between 1950 and 1998 as world production itself. The Uruguay Round, so called because the first meeting, took place in Uruguay in 1986, differed from previous rounds in that it did not concentrate mainly on trade in manufactured goods. The final treaty in fact covered three main areas, agriculture, textiles and services. The Uruguay deal made a start in dismantling protectionist barriers but, even so, they remain significant. An important part of the deal was that non-tariff barriers, such as quotas, have to be converted in to tariff barriers. This will make the cost of protectionism much more transparent. Textiles have traditionally been highly protected too. This is because the major industrialised countries once had important textile industries of their own which have increasingly come under competitive pressure from Third World countries. ...read more.


The USA and Canada also signed an agreement in 1988 which effectively removed most trade barriers between the two countries. In 1994, this was extended to include Mexico under the North American Free Trade Association (NAFTA) agreement. If this were to carry on, it would be possible to see a world comprised of several large trading blocs, each with common external tariffs and free trade within the bloc. This would contradict the vision of GATT and the WTO which is to remove trade barriers between all countries. It is argued that FTA's are not as successful at reducing overall tariffs and that the WTO should aim to allow only customs unions to be formed. With FTA's, a country can still set their own tariff levels but under a customs union negotiation can take place, and liberal countries would push for a lower common external tariff. This would reduce overall tariffs. Although in recent years the role of the GATT (now WTO) has tired against other hardened guidelines, it should not be underestimated how much their policies have reduced tariffs on a world scale. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    How successful has the WTO been in achieving it’s objectives?

    5 star(s)

    However, the problem is that though tariffs have decreased, this is also due to an increase in trading pacts. In these trading agreements like the Andean Pact, NAFTA, Marcosur, the EU or the Asia Pacific Economic Cooperation, tariffs are lowered whilst all trade barriers against the rest of the world are kept up.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    Legally, this approach is Procrustean: it smacks of Cartesian, top-down legal symmetry, wonderful for lawyers and Utopian constructors of global governance; but it slams the door on healthy, competitive, bottom-up national experiments with policies and institutions tailored to differing local circumstances.

  1. Will trading fairly reduce world poverty?

    Now the store has ordered one million Fairtrade Bags for Life, made from unbleached, biodegradable cotton. Co-op was first and still receives lots of applause from Fairtrade experts. Marks and Spencer 'Plan A', M&S's ethical overhaul, includes a major increase of Fairtrade cotton over the next year, from 100 tonnes to a projected 6,000 tonnes.

  2. Is Mexico better off with NAFTA

    Mexican tariffs on US and Canadian goods to understand the impact of NAFTA's tariff cuts on Mexican jobs"7.

  1. trading blocs

    3 - Increases competition and lowers prices Forming a regional trade bloc like the European Union allows the opening of frontiers for all its members. As a consequence, the countries where the labour force is expensive (like Germany or France in Europe and the USA)

  2. Carbon Credit Trading

    Heinz U.S. claims to have adopted a proactive stance with a high degree of social responsibility towards the carbon crisis. In 2008, it announced a mission statement - a series of environmental sustainability goals - based around an objective of reducing greenhouse gas emissions by 20% by 2015 (Heinz, 2008).

  1. International Trade - I have been asked to investigate the possibility of a company ...

    There are a variety of benefits, which occur from using intermediaries this is because they narrow down the amount of operations that a business is required to do. Also the managing of the business and its operations are easy to manage.

  2. Globalisation and Protectionism.

    Trade liberalisation increases the size of the market, so that the market is now on a global scale. This leads to increased competition in the domestic market, leading to increased efficiency. Due to the larger market size, firms can benefit from economies of scale, which can lead to lower costs and the increased competition stimulates investment and advances in technology.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work