Importance Of International Trade

846 Words4 Pages
Exports and imports are the lifeblood of international trade, a trade system that was once a system of anarchy. Now the World Trade Organization (WTO) governs the trade of almost one hundred-seventy member nations. The WTO is a permanent global institution that “covering services, intellectual property and investment issues as well as pure merchandise trade.” (Ravenhill 423) It evolved from the General Agreement on Tariffs and Trade (GATT) after the result of the Uruguay round in 1994 and the passing of the “Marrakesh Agreement Establishing the World Trade Organization Act” becoming an international organization that monitors international trade. (Piewitt 66) The World Trade Organization has been a success so far with a roster of around one hundred and seventy-member nations and said member nations following trade agreements and case polices. The reason why it is important for member nations of the WTO to follow the social contract of the organization is that the WTO works on members honesty. The WTO lacks the ability to force its member nations to comply to the rules and rulings on trade. Such a dependence on members’ trust is a legacy of the Bretton Woods systems of international organizations after the second world war; yet, nations are ration actors and they see the WTO as a benefit to their nations wealth and continuous success. The WTO is still a young international institution compared to its peers the World Bank and the International Monetary Fund. However, in such a short period of time the institution functions have not been changed by much. The goal of the current WTO is still following the original idea of its creation; the idea of free enterprise between nations, this includes free trade as the main way to organize economic activity of member nations, a rule of a law where member nations can file cases of wrongdoings and other civil disputes, and finally an equality of opportunity rather monopolies of powerful nations. (Porter 107) The main benefit of the WTO is the idea of the most favored nation (MFN), which is a national treatment policy which entails that to be a part of the WTO, a member nation must agree to use the same conditions on trade with all other WTO members. (Bowen 1349) The
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