WTO or World Trade Organization is establish in 1st Jan 1995 before that it was called as GATT or General Agreement on Tariffs and Trade in 1948. WTO came out of negotiations, and what WTO does is the result of negotiation. WTO is an organization for liberalizing trade WTO also a place to settle trade disputes and also operates a system of trade rules. WTO today has 153 members from all around the world. It represents more than 95% of trade in the world. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
The goal is to help manufacturers of goods and services, exporters, and importers do their business. The General Agreement on Tariffs and Trade (GATT) was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation, similar international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specific agency and would address not only trade barriers but other issues related to trade, including employment and investment.
But the ITO treaty was not approved by the U. S. Advantages of WTO: World Trade Organization helps member states in various ways and this gives them benefits such as: * Helps promote peace within nations * Rules makes life easier to all * Provides more choices of products and qualities * Trade raises income Helps promote peace within nations: Peace is a result of two most important principle of the trading system, helping trade flow smoothly and providing countries with a useful and fair outlet for dealing with disputes over trade issues.
Rules make life easier for all: WTO system is based on rules rather than power and this makes life easier for all trading nations. WTO reduces some differences giving smaller countries more confidence, and at the same time freeing the major powers from the difficulty of having negotiates trade agreements with each of the member states. It provides more choice of products and qualities: It gives consumer more choice and a wider range of qualities to choose from. This expands the range of final products and services that are made by domestic producers, and it increases the range of technologies that they can use.
For example mobile telephone equipment available services sprang up even in the countries that did not make the equipment. Trade raises income: Through WTO trade barriers are lowered and this increases imports and exports so earning the country foreign exchange raises the country’s income for example to helping companies and workers adjust by becoming more productive and competitive in what they are doing or by changing to new activities. Disadvantages of WTO: WTO is a group of Countries that negotiates between trades. A disadvantage is that the countries never agree on anything.
For example, the countries have to vote on a decision and a country like Uganda’s vote would not even be taken into account. Some countries with higher status such as the USA will encourage other countries to change their votes and agree on their decisions. WTO is destroying the environment and increasing inequalities and it encourages trade which are not enjoyed by poor countries, create sun employment and increases dependency on other countries. Thesis: WTO gives free market access to countries which are developing and allows free trade to the organisations.
WTO promotes peace within the nations by dealing with all the countries and it makes life easier by reducing the costs to small developing countries Introduction of NAFTA: The North American Free Trade Agreement was signed in 1994 between the US, Canada, and Mexico. This results a new way of free trade agreements between developed and developing countries and is closely watched by economists. It can be said that NAFTA had a positive effect on Mexico’s growth over the last 15 years but all together Mexico has largely missed the opportunity to establish a structure that confirms sustainable long run growth.
Studies have revealed that since 1985, and particularly since 1995, Mexico has been among the top 10 countries in terms of increasing its share in the world Mexico is a country With one of the largest cities and the richest man in the world, especially mighty neighbour, Mexico is bound to develop further than other Latin American countries. The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico is the first in a non-multilateral setting between a developing and developed countries.
NAFTA’s effects are monitored closely by economists as this experiment could be applied to other free trade agreements. Advantages of NAFTA: NAFTA created the world’s largest free trade area. It allows the 450 million people in the U. S. , Canada and Mexico to export to each other at a lower cost. So it is responsible for $1. 6 trillion in goods and services every year. NAFTA Increased Trade in All Goods and Services: Trade between the NAFTA signatories more than multiplied, from $297 billion in 1993 to $1. 6 trillion in 2009. Exports from the U. S. o Canada and Mexico rose from $142 billion to $452 billion in 2007, and then declined to $397 billion in 2009 this shows how the trade varies every year between the trading countries. Reduced Oil and Grocery Prices:
The U. S. imported $116. 2 billion oil from Mexico and Canada as sell oil this also reduces U. S. reliance on oil imports from the Middle East countries. It is especially important now that the U. S. no longer imports oil from Iran. Because Mexico is a friendly country Since NAFTA eliminates tariffs, oil prices are lower. The same is true for food imports, which totalled $29. billion in 2010 up from $28. 9 billion in 2009. Without NAFTA, prices for fresh vegetables, chocolate, fresh fruit except bananas and beef would be higher. Stepped Up Foreign Direct Investment: Since NAFTA came, U. S. foreign direct investment (FDI) in Canada and Mexico more than increased to $357 billion in 2009, up from $348. 7 billion in 2007.
Canadian and Mexican FDI in the U. S. increase to $237. 2 billion, up from $219. 2 billion in 2007. Disadvantages of NAFTA: NAFTA has many disadvantages. First and foremost, is that NAFTA made it possible for many U. S. anufacturers to move jobs to lower cost in Mexico the manufacturers that remained lowered in wages The second disadvantage is that many of Mexico’s farmers were put out of business by U. S. -subsidized farm products. NAFTA provisions for Mexican labour and environmental protection were not strong enough to prevent those workers from being exploited. U. S. Jobs Were Lost: Since labour is cheaper in Mexico, many manufacturing industries moved part of their production from high-cost U. S. states to Mexico. Between 1994 and 2010, the U. S. trade deficits with Mexico totalled $97. 2 billion, displacing 682,900 U.
S. jobs. Nearly 80% of the losses were in manufacturing. California, New York, Michigan and Texas were hit the hardest because they had high concentrations of the industries that moved plants to Mexico. These industries included motor vehicles, textiles, and computers Mexico’s Farmers Were Put Out of Business: Mexico lost 1. 3 million farm jobs When NAFTA removed tariffs, corn and other grains were exported to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33. 2% of total farm income in 1990 to 13. 2% in 2001.
Most of those subsidies went to Mexico’s large farms Thesis: In my opinion NAFTA is very complicated even if there have been some negative values related to NAFTA. Overall it has increased economic activity for all trading partners between USA, Canada and Mexico. Bibliography: http://www. wto. org/english/thewto_e/whatis_e/who_we_are_e. htm http://www. wto. org/english/forums_e/students_e/students_e. htm http://en. wikipedia. org/wiki/North_American_Free_Trade_Agreement http://www. international. gc. ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/index. aspx? view=d http://www. naftanow. org/