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World Trade Organization

The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement that was formed with the sole objective of regulating international trade.  It was negotiated during the UN conference meeting on employment and trade.  It took effect in 1947 when governments had failed to create international Trade organization.  The main purpose of GATT was reduction of trade barriers and tariffs and elimination of preferences on a reciprocal and mutually advantageous basis.

It was established in Geneva to provide a framework upon which international trade would be regulated.  From the beginning, the charter envisioned the formation of an international trade organization.  However, member governments never ratified this.  Consequently, the General Agreement on Tariffs and Trade continued being governed by interim or provisional measures.  This implies that GATT remained an organization without a formal structure.  This early pitfall provides a glimpse of why enforcement of the treaty may have stalled. The provisional measures reigned until 1994, from where the Uruguay Round Agreement was completed at the World Trade Organization. 

The world trade organization (WTO) was established in 1995 to guide the administration of rules in reference to trade among countries.  Its function was intended to liberalize and supervise international trade. Its main purpose was to regulate trade between participating countries and provide a frame work of formalizing and negotiating trade agreements.  This was in part due to the inability of GATT to effectively deal with the distortions occasioned in the agricultural sector and the international trading system.

This multilateral organization’s principal function would be to monitor negotiations aimed at reducing trade barriers.  In addition, the organization would check market distortions and in the process facilitate economic growth and development.  The organization also offered a platform for countries to air their grievances concerning international trade.  This multilateral organization principal function would be to monitor negotiations aimed at reducing trade barriers. In addition, the organization would check market distortions and in the process facilitate economic growth and development. The organization also offered a platform for countries to air their grievances concerning international trade.

Recent Example Reflecting WTO Involvement in Promoting International Trade

Over the years since the establishment its establishment, the organization has been effective in ensuring that the negotiated rules are reinforced.  This has been facilitated by special focus on several policies including; emphasis on transparency and routine notification of any changes on rules and regulations, involvement in matters concerning global economy, and offering export promotions especially to developing nations.  For example the Basic Telecommunications Agreement (BTA) was made to encourage competition and remove barriers in the telecommunication industry.  Member countries were required to allow duopoly operators in the provision of telecommunication services. Ghana was one of the member countries which were affected by the agreement since it had been practising monopoly in the industry.  Ghana in 2005 agreed to commit to the policies set in the agreement including opening the market to allow competition in the distribution of mobile services and internet access.  This was a major step towards economic and development growth in Ghana.

Another example of WTO’s effective influence on international trade is through the membership of Tajikistan which became the 159-th member of the World Trade Organization in 2012.  This enabled Tajikistan which is rich in energy resources to cooperate with other countries of the world according to the WTO standards.   However, the most important thing is that Tajikistan membership in the WTO will make its economy competitive and independent from the Russian Federation.

Role of the World Trade Organization in Promoting International Trade

The World Trade Organization aims to improve the welfare of people in all member countries.  Since its establishment, the organization has delivered significant benefits to the global economy through the liberalization of international trade.  The organization has also stabilized trade rules and introduced an effective mechanism of trade conflicts settlement. “This has given businesses the confidence to engage in the type of global trading strategies that have allowed a companies like Apple to have iPod components manufactured and assembled in different countries and then shipped back to the U.S., generating greater profits for Apple and ultimately providing cheaper products to consumers” (Meltzer, 2011).

Comparison of WTO with Regional Organizations

Regional organizations such as the European Bank for Reconstruction and Development, Latin American Development Bank, African Development Bank, and the Asian Development Bank have similar objectives with WTO; those of facilitating economic development.  The only significant difference is in regional specialization and membership.  The membership of regional organizations is mainly connected with their investment opportunities and highly-developed economies to follow.  WTO on the other hand encourages membership of countries all over the world with principle objective being to reduce trade barriers disregarding development status of the member countries.