Benefits of the World Trade Organization

A much maligned and misunderstood organisation, the World Trade Organization (WTO) offers  several benefits to member countries.  In this issue of Eye on The World, we seek to explain of some of the benefits to be obtained from an organization such as the WTO. 

1.      Promotes Peace - Throughout history many trade disputes have resulted in war.  Similarly, most countries which have had smooth trade relations have not gone to war with each other.  The message: good trade promotes peace.The WTO seeks to provide the means for allowing trade between nations to be smooth, and provides the basic rules of the game.  In short, it intends to increase the levels of confidence and trust necessary to promote trade and avoid conflict. For further reading click here   

2.      Provides a Mechanism for Settling Disputes - Even as trade liberalization means greater opportunities for trade, there is also the potential for more trade-related disputes. With the WTO as the universal organisation created to help resolve trade disputes, conflicts between countries are addressed according to established guidelines.  As these guidelines are created and accepted by the member countries, this often results in an amicable solution. For further reading click here 

3.      Establishes Rules - If everyone has to conform to the same set of rules, and none is regarded as being 'more equal than others', disputes can be settled based on the knowledge that all are treated equally.  The same is true for countries that operate under a set of rules. The WTO operates under clearly established rules which were agreed to by all member countries.  This levels the playing field between large and small countries. For further reading, click here

4.      Improves Cost of Living - The concept of free trade means that there are no barriers whatsoever to prevent trade from taking place. Imports will not be prevented from entering a country on the basis that they would affect the goods and services produced locally.  There would also not be any   costs associated with keeping these imports out nor would there be any unnatural costs in ensuring that locally produced items would fare better on the market than imported items. As there would be none of these costs, they could not therefore be passed on the citizens. The WTO aims to make this concept as close to reality as possible by seeking to remove or reduce  trade barriers and subsidies. Consumers will therefore  benefit from cheaper imports either directly or indirectly.  This will in the long run help to reduce the cost of living. However, the fact that this affects local production and revenues, is often a source of contention and will require further explanation. For further reading, click here

5.      Offers More Choices - The ability to trade with others allows a country the opportunity to offer a wider variety of goods and services to its people. It also facilities the exportation of a country's products to more persons thus creating greater demand for its output. This can also impact on local production as imported raw materials can lead to a wider variety of items being produced by the country. For further reading, click here 

7.      Facilitates Economic Growth and Jobs - An increase in the demand for a country's products and services can lead to an increase in jobs for its people and overall growth. As the WTO facilitates trading of goods and services between nations, it can be a medium for ensuring more jobs for people. With greater trade there is the likelihood of new technologies being introduced to countries and this can in turn create job opportunities. For example, with the advent of the computer, the increased usage of this technology worldwide has spurred many related industries, each requiring skilled personnel.      This also threatens some industries and will need further explanation as this is not an obvious benefit to those who may lose their jobs. For further reading, click here  

8.      Fosters Efficiency - The ability to trade means that we can concentrate on the things which we do best and obtain from others that which we are not so good at. In facilitating trade, the WTO helps countries to become more efficient by eliminating bureaucratic red tape, ensuring transparency and standardizing customs procedures. For further reading, click here 

9.      Lobbying - The WTO is there to serve each and every one of its members and to ensure that trade policies are respected. No one country will be allowed to dominate because of its size or economic strength. Each country will have access to the same information and will be given the tools that will enable it to lobby for its needs. For further reading, click here  

10. Ensuring Good Government - The WTO acts as a watchdog for world trade by ensuring that governments around the world stick to the agreed rules.  Because governments have to conform to these rules, it ensures that certain practices such as quotas, protectionism and trade barriers which can lead to corruption and wastefulness are eliminated. Governments therefore have to find other more efficient ways of sustaining local industries. For further reading, click here