Write an essay to evaluate the track record and the role of WTO towards globalization and free trade.
Write an essay to evaluate the track record and the role of WTO towards globalization and free trade.
The World Trade Organization (WTO) was established in 1995.It is the successor to the General Agreement on Tariffs and Trade (GATT), which was formed in 1948. The old GATT had extensive loopholes that allowed countries to avoid the trade-barrier reduction agreements - a case whereby members could choose to obey the law, only if they want to.
Today, all WTO members must fully comply with all the agreements under the Uruguay Round. The Uruguay Round is an agreement to lower trade barriers significantly worldwide. Adopted in 1994, the agreement has been signed by 147 nations. 31 This agreement has reduced tariffs by one-third worldwide, which in turn should raise global income by $235 billion annually.
The WTO is the only global international organization dealing with the rules of trade between nations. Its goal is to help producers of goods and services, exporters, and importers to conduct their business. It's an organization for liberalizing trade and a forum for trade negotiations. In another words, WTO promotes globalization by settling up a platform for free trade.
What is globalization?
It is the process of bringing distant markets and people across the world closer together.
Globalization involves interaction and integration among the people, companies, and governments of different nations. This has resulted in the worldwide distribution of networks, reducing of geographic and political boundaries. Now, everyone with extra cash on hand may be able to enjoy a more comfortable living because their savings are more fruitfully invested abroad, as well as everyone abroad who benefits from that foreign investment. It is poor people who can buy cheaper food and clothes produced abroad. Asians are able to buy goods from US without making a trip there.
WTO Globalization Track Record
International trade now accounts for almost 20% of the global gross domestic product, up from just 10% a decade ago. 1 In China and the rest of East Asia, more people are moving out of poverty between 1990 and 2000 than the entire population of the United States. Nations such as Hungary, Malaysia, and China have taken the leap into high-end manufacturing - improving living standards and offering better careers for many workers. The main reason was global trade. 2
Global competition and imports also keep down prices, which in turned ...
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WTO Globalization Track Record
International trade now accounts for almost 20% of the global gross domestic product, up from just 10% a decade ago. 1 In China and the rest of East Asia, more people are moving out of poverty between 1990 and 2000 than the entire population of the United States. Nations such as Hungary, Malaysia, and China have taken the leap into high-end manufacturing - improving living standards and offering better careers for many workers. The main reason was global trade. 2
Global competition and imports also keep down prices, which in turned slowed down inflation. A more open economy also encourages the exchange of fresh ideas from abroad. Undoubtedly, poverty and inequalities are still present on wide scale. But over the past 50 years, trade has been a powerful engine for growth
In conclusion, developing countries that are open to trade are catching up with rich ones. That is particularly true for China. By joining the WTO, the Chinese can expect tremendous improvement in their living standards.
How did the WTO facilitate the growth of the free trade? The WTO see lowering trade barriers as the best way to encourage trading. The barriers include tariffs and measures such as import bans or quotas that restrict quantities selectively. During the seven and a half years of the Uruguay Round, over 60 of these countries implemented trade liberalization programs in parallel. At the same time, developing countries and transition economies were much more active and influential in the Uruguay Round negotiations than in any previous round. At first these negotiations focused on lowering tariffs on imported goods. As a result of the negotiations, by the mid-1990s industrial countries' tariff rates on industrial goods had fallen steadily to less than 4%. 3
By the1980s, the negotiations had expanded to cover non-tariff barriers on goods, and to new areas such as services and intellectual property. In fact, the most notable recognition of WTO could be the coverage of intellectual property rights and trade related investment measures such as exchange controls. For example, China, which joined the WTO not long ago, did not do much to control the rampant piracy problems prior to joining the WTO. The Chinese government is beginning to move more aggressively against counterfeiting with its admission to the WTO.
There have been eight rounds of trade negotiations since GATT's creation in 1947-48. The ninth round, which is in progress, is the Doha Development Agenda. The current Doha Development Agenda would address countries' concerns about the problem they faced in implementing the Uruguay Round agreements. The Doha Development also includes negotiation on protection for agriculture and services to promote the economic growth of all trading partners and the development of developing and least-developed countries.
At times, promising not to raise a trade barrier could be of equal importance as lowering it. This promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition - choice and lower prices.
The trend toward globalization has also brought the formation of several organizations such as the:
) North American Free Trade Agreement, An agreement between Canada, the United States, and Mexico that created the world's largest free-trade area.
2) Free Trade agreement of the Americas, A regional trade area comprising of 26 countries in North and South America.
3) Association of Southeast Asian Nations, A trade agreement among ten Asian nations.
4) Asia-pacific Economic Cooperation, A trade agreement that includes most ASEAN countries plus eleven other nations.
5) European Union.
When Globalization do not work so well
There are also other nations who have not fared so well. From WTO point of view, Governments must first achieve macroeconomic stability, supportive infrastructure and properly running domestic markets. Without them, they cannot harvest the benefits of open trade. The key to success is a government that makes the best use if inflows of foreign investment and know-how. That requires a track record of business-friendly policies to entice multinationals and domestic's entrepreneurs alike to train workers, invest in modern technology, and to develop local people.
This also implied those solid government policies, good public education, a legal system that protects property rights, and a society where prosperity is widely shared. These are kind of pro-growth conditions that most of the East Asia employed to develop from sweatshops I in the 1960s and 1970s to industrial powers.
The old Soviet bloc demonstrates how competition is dividing Eastern Europe into winners and losers. Hungary and Poland are thriving, while Romania, Bulgaria, and to some extent, the Czech Republic are lagging. Different approaches to privatization help to explain this difference. The Czech Republic and Romania particularly issued shares in local factories to their citizens -a policy that seemed like a fair way to benefit the public. But that approach put insiders in charge of their enterprises. Hungary, instead sold factories to both local businesspeople and the multinational. This would hasten the restructuring of the manufacturing sector.
Globalization would continue because the world's major markets are too vitally integrated for globalization to stop.
References
. "Hurting In Lockstep," Business Week, October 22,2001, 30
2. "Anti-Trade/Pro-Poverty," Fortune, January 10,40
3. www.wto.org
* Lamb, Hair, McDaniel, 2004, Essentials of Marketing, Chapter 3, page 66-102
* http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm
* http://www.wto.org/english/news_e/pres98_e/pr94_e.htm
* http://www.wto.org/english/news_e/spmm_e/spmm32_e.htm
* http://www.wto.org/english/news_e/spmm_e/spmm51_e.htm
* http://www.wto.org/english/news_e/pres04_e/pr385_e.htm
* http://www.globalization101.org/globalization/
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