What role does the WTO play in international business? Argue the case that the WTO is either helpful or a hindrance to international trade, giving particular examples to support your case.

3304 Words May 5th, 2010 14 Pages
TITLE OF ASSIGNMENT: What role does the WTO play in international business? Argue the case that the WTO is either helpful or a hindrance to international trade, giving particular examples to support your case.

1. INTRODUCTION

International trade has been increasingly frequent since industrialisation. Today globalisation becomes well-known among people. As economies have become more open, countries become more dependent on one another. However, rarely is free trade truly free trade due to country interventions which aim to promote industrialisation or national interests, or protect employment or consumer (Morrison 2006). In an interdependent world the actions of one country has consequences for others. Hence The World Trade Organisation
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(WTO, 2009)

•Handling trade disputes.

Settlement of trade disputes is an important role of WTO, which is one of WTO's original intentions (WTO, 2009). Unfair trade practices between nations may be brought to a WTO panel (normally consists of three persons proposed by the WTO Secretariat) to seek for a resolution. All stages of deliberations are limited by time, and the process binds the WTO's rulings (Daniels, 2000). If the offending nation fails to comply with the judgement decided by WTO panel, its trading partners (the offended nations) have the right to compensation; if this penalty is ineffective, then the offended nations have the right to impose countervailing sanctions on the offending nation (WTO, 2009). A good example is "the tariff duty US imposed on EU products in response to the EU's reluctance to abolish its banana import restrictions" (Hanrahan 2001). This indicates member nations' confidence in effectiveness of the WTO dispute-resolution process.

•Monitoring national trade policies through the Trade Policy Review Mechanism (TRPM).

WTO also plays a role in the periodic review of the member nations' trade policies, including two parts: First, to monitor whether or not and to what extent member nations have been following the disciplines and the commitments. By implementing such periodical reviews, WTO acts as a watchdog to ensure that member nations comply with its rules, and therefore prevents

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