WTO – Trade Liberalisation Flashcards
(2 cards)
What is the role of the WTO in trade liberalisation?
The World Trade Organization (WTO) promotes free and fair trade among member countries by:
Reducing tariffs and quotas
Settling trade disputes
Ensuring non-discrimination (Most Favoured Nation principle)
🧠 Trade liberalisation encourages:
Efficiency through comparative advantage
Lower prices for consumers
Economic growth, especially in developing countries
⚠️ Criticisms:
Can harm domestic industries and jobs
Can worsen inequality if not managed properly
📝 Exam angle:
“To what extent has the WTO succeeded in promoting global trade liberalisation?”
How can regional trade agreements (RTAs) conflict with WTO rules?
RTAs (like the EU, USMCA, or ASEAN) offer preferential access to member states, which can conflict with the WTO’s non-discrimination rule (MFN).
🌍 Potential conflicts:
Fragmentation of global trade
‘Spaghetti bowl’ effect – overlapping agreements create complexity
Undermines multilateralism and the WTO’s authority
⚖️ RTAs can co-exist with WTO rules if they reduce barriers on a substantial amount of trade and are transparent.
📝 Exam angle:
“Evaluate the impact of regional trade agreements on global trade liberalisation.”
