WTO

Question 1

what are the overall purposes of the WTO (5)

Answer 1

non discriminating
free from barriers (protectionism)
predictability (should be held to agreements)
promote fair comp
special provision for developing nations (have the flexibility to grow before any policies enacted on them)

Question 2

what is a bilateral trade agreement

Answer 2

deal between two countries to reduce or eliminate trade barriers such as tariffs and quotas, aiming to increase trade and economic cooperation between them.

Question 3

how do they solve disputes

Answer 3

Any disputes are subject to a timetable so that the issue should be resolved within one year at most

If a member country loses the case it must abide by the decision, subject to an appeal that should take less than 3 months

Damages can then be paid or sanctions taken against the offending member country

Question 4

what is the Uruguay round

Answer 4

Agreements to reduce the tariffs applied to developing nations products from developed nations. Plus developed nations agreed to reduce export subsides and support for domestically produced agricultural products.

Question 5

what is the Doha round

Answer 5

Focused on the needs of developing nations to help especially those poorest nations grow through export led growth to boost AD and reduce absolute poverty rates.

Question 6

what are 2 advantages of the WTO

Answer 6

encourages free trade- the reduction of trade barriers such as tariffs and quotas- makes it easier for domestic firms to export to foreign markets, increasing potential demand for their products. Access to a larger global market allows firms to increase their output to meet higher demand which can also drive efficiency. can charge lower prices better for emerging and developing economies- can help with equality.

transparency and predictability- the WTO requires member countries to publish and notify all trade-related policies and changes reducing uncertainty for firms so they engage more confidently in x and m activities- strengthens free trade flows by reducing the risks. increased specialization based on comparative advantage. The increase in x and m leads to higher levels of AD and potential improvements in the current account balance. In the long run, greater exposure to international markets through free trade encourages innovation, economies of scale, and productivity growth helping LRAS.

Question 7

what are 2 disadvantages of the WTO

Answer 7

Diversification- arguably developing countries who specialise in primary products (e.g. agricultural products) need to diversify into other sectors. To diversify they may need some tariff protection, at least in the short term. Many of the existing industrialised nations used tariff protection when they were developing. Therefore, the WTO has been criticised for being unfair and ignoring the needs of developing countries.

Environment- free trade has often ignored environmental considerations. e.g. Free trade has enabled imports to be made from countries with the least environmental protection. Many criticise the WTO’s philosophy that the most important economic objective is the maximisation of GDP. In an era of global warming and potential environmental disaster, increasing GDP may be the least important. Arguably the WTO should do more to promote environmental considerations.