Title: Promoting active learning
1International trade and the role of the WTO
2World Trade Organization Some Facts
- The WTO is the result of half a century of
international co-operation. - Today, the WTO has 135 member countries, with a
combined population of about 4 billion, and
accounts for over 90 of world trade.
3World Trade Organization Some Facts
- Over 30 more countries, whose populations account
for a further 30 of the worlds total, wish to
join the WTO. - Since 1948, world trade has consistently grown
faster than world output.
4Growth in real GDP and in real exports of
goodsand services total OECD countries
Growth in GDP
5Growth in real GDP and in real exports of
goodsand services total OECD countries
Growth in exports of goods and services
Growth in GDP
6World Trade Organization Some Facts
- In 1998, world merchandise exports were worth
over 5 trillion. In real terms, that represents
an 18 fold increase since 1948. - In 1950, only 8 of national output of goods and
services was sold abroad. Today the figure is
26.4 .
7World Trade Organization Some Facts
- The average tariff on manufactured products stood
at 4 on the completion of the Uruguay Round of
trade talks in 1994. In 1947 the figure was 35. - The WTO administers agreements in relation not
only to goods, but also to trade in services and
intellectual property.
8The Origins of the WTO
- General Agreement on Tariffs and Trade (GATT)
signed in 1947 to - avoid the protectionism of the 1930s
- achieve political stability
- achieve an orderly expansion of world trade
- Had limited power, however
- inter-governmental treaty, not an international
organization
9The Origins of the WTO
- Eight rounds of GATT from 1947 to 1994
- success in reducing barriers to trade
- but increasing complexity of trade issues
- growth in non-tariff barriers
- increased membership
- new trade issues
- pressure groups
- GATT changes to the WTO
10Foundations of the WTO
- Four pillars
- non-discrimination
- most favoured nation rule
- reciprocity
- market access
- dispute settlements procedure
- fair competition
- retaliation legitimised
11The WTO and the Pursuit of Free Trade
- Advantages of free trade
- gains from specialisation according to
comparative advantage
12Production possibilities for two countries
Pre-trade exchange ratios
Less developed country 2 wheat for 1
cloth Developed country 1 wheat for 2 cloth
International trade exchange ratios
(LDC exports wheat DC exports cloth)
Less developed country 1 wheat for 1
cloth Developed country 1 wheat for 1 cloth
13The WTO and the Pursuit of Free Trade
- Advantages of free trade
- gains from specialisation according to
comparative advantage - greater competition and long-term efficiency
gains - faster growth
- growth transmission
- expanding markets
- technological diffusion
- greater consumer choice
- greater equality (factor price equalisation)
14The WTO and the Pursuit of Free Trade
- Drawbacks of free trade
- favours the economically powerful
- issue of fair trade
- hard for infant industries to develop
- special interest groups (senile industries)
- contagion
- problems for primary exporters
- short-term fluctuations
- long-term deficits
- Advantages outweigh disadvantages?
15The Future of the WTOOpportunities and Threats
- Opportunities
- new members
- China? The Russian Federation?
- dispute settlement procedures
- orderly trade environment
- new agreements
- trade and investment
- trade and competition policy
16The Future of the WTOOpportunities and Threats
- Threats
- regionalism
- EU / US trade wars
- strain on multilateral ethos
- worlds poorest nations
- 48 poorest nations account for ½ of world trade
- debt burden and structural weaknesses
- only 19 rich countries have granted them
preferential trade access
17GDP per head as of US GDP per head 1997
(using ppp exchange rates)
18The Future of the WTOOpportunities and Threats
- Threats
- trade and the environment
- free trade and environmental externalities
- attitude of the WTO
- cultural effects of free trade
- free trade and the culture of materialism
- attack on traditional values
19A useful Web site
- For a discussion of the WTO and its activities,
see - http//www.oneworld.org/panos/briefing/brief37.ht
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