The World Trade Organization or WTO is an international organization that promotes and deals with trading of different goods and products between different nations. The organization helps in exporting and importing various services and items coming from different countries. The World Trade Organization was started in January 1, 1995 but the trading system between nations started as early as 1948.
The WTO is responsible for setting the trade policy in exchanges between countries. Some of the products of trading include textiles, food, telecommunications, banking and more. Although these are all different products, they all follow the same principles.
Here are some more details regarding the World Trade Organization:
- Trade without discrimination. This is one trade policy that is strictly enforced. Trade between different countries must all be equal. A country cannot grant a specific country a favor in trading. There are other some instances where a country is able to discriminate but this is a rare occasion. Another aspect considered for discrimination is the treatment of local and imported goods. This is known as "national treatment" wherein people must give equal treatment to products or services from another nation as they give to their local products and services.
- Freer trade. In order to promote freer trade, lowering tariffs on products that are imported must be lowered. The tariffs are discussed by the GATT or the General Agreement on Tariffs and Trade. Since the year 1947, there have been a total of 8 rounds of trade negotiations. Each time, the tariffs are discussed. Some of the aspects that are discussed in trade negotiations are tariff statistics, intellectual property, dispute settlement between countries or agreement trade, non-tariff measures and the rules of the World Trade Organization.
- Predictability. Countries that open their markets for products bind commitments with the other countries. The tax imports of a country can amount to ceiling tax rates. In the event that a country changes its binding, the loss of trade to the other countries must be compensated by the country that changed the binding commitments. The solution to this is to make the trade rules as comprehensible and transparent as can be.
- Fair competition. The WTO promotes fair competition among the different products and services that are exchanged between countries. There are rules that must be followed in order for the trade between nations to be fair. Each government that is a member of the WTO has regulations and consequences for those who engage in unfair trading. The damages done by unfair trading can be calculated and added to the import duties.
- Economic reform. The WTO aims to contribute to the development of the economy of the nations that are members of the global trade organization. This will help developing countries to be able to be at par with countries that are already well-developed. The developing countries need time to adjust to the new rules that were implemented from the previous trade negotiations.
These are the concepts behind the World Trade Organization. More information regarding the organization can be found at the organization's official website which is found at wto.org.