'Critically assess the role of the World Trade Organisation (WTO) as a means of promoting economic growth and development'

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Essay Title:        ‘Critically assess the role of the World Trade Organisation (WTO) as a means of promoting economic growth and development’



The World Trade Organisation (WTO) facilitates trade between its 148 member states. It has become a central institution for economic governance and is the framework for trade liberalisation. The WTO (based in Geneva) replaces the General Agreement on Tariffs and Trade (GATT) in this regard. GATT was established in 1947 in the aftermath of World War II, a time when the global economy was understandably unstable. The original objectives of GATT were to reduce tariffs and to facilitate global trade between states. The underlying principle was based on ‘Most Favoured Nation’ (MFN), a concept which assigned one country to another, and then gave that country beneficial trading rights. GATT endeavoured to grant every country an MFN status so that no one country would hold an advantageous position over another.

One key difference between the two bodies is that unlike GATT, the WTO is a permanent body but is not a specific unit of the United Nations. It came into being in 1995 as a result of the final round of the GATT negotiations called the Uruguay Round. The WTO has certain duties such as ‘monitoring national trading policies, handling trade disputes, enforcing the GATT agreements, which are designed to reduce tariffs and other barriers to international trade…and to eliminate discriminatory treatments in international commerce’.

        The theoretical advantage if the WTO is that there will be a permanent body to oversee the liberalisation of free trade ensuring smooth negotiations between its members. Tot his end it is hoped that greater economic growth, development and prosperity will flourish. There are of course to sides to everything and there are many arguments criticising both the WTO and free trade itself. Detractors contend that free trade cannot obtain a uniform sense of equality for all states; they assert that free trade favours larger nations, and the undemocratic forces behind the WTO will hinder its progress. The purpose of this essay is to critically assess whether the WTO can overcome these criticisms and achieve its goal of promoting economic growth and development.


        The Success of the WTO in promoting economic growth and development


The WTO was created was to agree upon set rules of trade among its 148 member states, to regulate trade disputes within these regions and as a result the WTO plays a vital role as an agent in promoting and protecting economic growth and development. It achieves this by removing tariffs and other obstacles to free trade such as ‘red tape’ bureaucracy, privatisation and deregulation of markets. Wintersteen writes that many economists argue the case of free trade i.e. the free movement of capital and goods across borders is essential in the long-term achievement of the growth and development of a nations economy. In order to achieve this Neoliberalists champion the causes of privatisation, deregulation and a general reduction in tariffs and quotas. This she says provides more accessible markets for trade between different states.

        A statement from the WTO says that ‘the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations…its main function is to ensure that trade flows as smoothly, predictably and freely as possible…the past fifty years have seen an exceptional growth in world trade…merchandise exports grew on average by 6% annually…total trade in 1997 was 14 times the level of 1950…GATT and WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth’.

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        The key clause of that statement relates to growth. More than 75% of the WTO membership is made of developing or least developed countries. To this end, all contracts contain exclusive provisions for them, which help to enhance their potential for growth and development. Examples of these provisions include longer times to implement agreements and commitments to agreements, measures undertaken to ameliorate trading opportunities, measures to safeguard trading interests and the WTO’s commitment to support their efforts at development, such as helping them build infrastructure for WTO projects, dispute handling and implementation of improved technical standards. It organises approximately one ...

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