Premium Essay

Principles of the Wto Trading System

In: Business and Management

Submitted By vomo777
Words 650
Pages 3
Logistics & International Trade
Principles of the WTO Trading System
The WTO has five fundamental principles that underpin the framework for its national trade policies. The WTO agreements are rules based and these rules are established as a result of a majority vote by its members and are such are referred to as negotiated agreements. The five fundamental WTO principles are;
• Trade without discrimination
• Freer trade: through negotiation
• Predictability: through binding and transparency
• Promoting fair competition
• Encouraging development and economic reform

Trade without discrimination
This WTO principle agreement advocates that countries cannot discriminate between its trading partners. This is in WTO language is referred to as Most-favoured-nations (MFN). Under the General Agreement on Trade in Services (GATS), when a country opens up its boarders and allows foreign competition in a particular country, that host country must also give equal opportunity to all WTO member countries in the same sector. This principle covers all services but the agreement allows some exceptions. Some of the exceptions are;
A country is able to set up a trade agreement that applies to goods traded only within its trading partners and it can discriminate against goods from outside the country, special access to markets can be given to developing nations if certain products from some specific countries are considered to be traded unfairly, the host country is able to raise its barriers against such specific products. However these exceptions are reviewed from time to time and they are not meant not to last more than 10 years. Also under this principle is treating foreigner and local equally as well as treating locally produced goods and imported goods the same way. So when an imported product arrives at a country it should be given the national treatment.
Freer

Similar Documents

Premium Essay

Wto-Study the Section on the Principles of the Trading System and Make a Set of Brief Notes About What These Principles Are.

...Hand in assignment Week 3 Anne Sofie Lund Introduction of WTO principle trading system WTO agreements cover a wide range of business areas such as: agriculture, textiles/clothing, banking, telecommunication, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property etc. The simple and fundamental principles are found in the multilateral trading system. Trade without discrimination 1. Most-favored –nation (MNF): treating other people equally MFN trading principals means it is not allowed discriminate other trading partners or to offer special favors such as lowering custom duty rate on one product for a specific country, all members need to have same duty rules for each product. 2. National treatment: Treating foreigners and locals equally Rules, which needs to be observed is that both locally and imported goods needs to be treated equally. The same rules apply for copyrights, patent and trademarks, for foreign and domestic services. The foreign should have same treatments as the local, which means treat foreign product, as you will treat your local product. National treatment applies only when a product or service or item of intellectual has entered the market. A country is although allowed to charge custom duty and tariffs on import product, which is not in market, and not charge custom on a locally produced market. WTO Encourages the trade through lowering the trade barriers, which includes custom...

Words: 763 - Pages: 4

Premium Essay

Wto in Reducing Protectionism

... The term is mostly used in the context of economics, where protectionism refers to policies or doctrines which protect businesses and workers within a country by restricting or regulating trade with foreign nations. Advantages of WTO World Trade Organization helps member states in various ways and this enables them to reap benefits such as: Helps promote peace within nations: Peace is partly an outcome of two of the most fundamental principle of the trading system; helping trade flow smoothly and providing countries with a constructive and fair outlet for dealing with disputes over trade issues. Peace creates international confidence and cooperation that the WTO creates and reinforces. Disputes are handled constructively: As trade expands in volume, in the numbers of products traded and in the number of countries and company trading, there is a greater chance that disputes will arise. WTO helps resolve these disputes peacefully and constructively. If this could be left to the member states, the dispute may lead to serious conflict, but lot of trade tension is reduced by organizations such as WTO. 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 inequalities giving smaller countries more voice, and at the same time freeing the major powers from the complexity...

Words: 548 - Pages: 3

Premium Essay

Three Views on Wto

...The Three Views and WTO Globalization has extended the opportunities available for economic growth leading to extensive lobbying amongst world financial institutions. The high influence of exchange rates has also extensively affected business transactions. The price of commodities, air fare tariffs, foreign exchange levels and export and import licenses have been affected across world markets. The World Bank, major banking institutions, World Trade Organization and UN agencies have converged to control the world markets from various levels due their extensive consultations and economic persuasions on vital financial matters. The economic control by these organizations has also lead to political and social influences amongst various nations across the world. Most countries’ sovereignty has been weakened especially amongst third world countries has they depend on financial support from these organizations for their financial stability (Gregory, 2000). The three main economic principles, economic liberalism, nationalism and structuralism can be used to analyze the functioning design and operation of WTO. Let us look at each of these perspectives and how they can be used to explain design of WTO: Economic liberalism, a principle that supports laissez faire economics also greatly values private property in production. It analyses the specific institution that produce a certain commodity e.g. wine production in Italy. The principle refutes the intervention of governments in...

Words: 1911 - Pages: 8

Premium Essay

The Benefits of Wto

...Lecture 5 - World Trade Organisation What is the WTO? The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. Who we are | Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 157 countries on 24 August 2012 Budget: 196 million Swiss francs for 2011 Secretariat staff: 640 Head: Pascal Lamy (Director-General)Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations | | There are a number of ways of looking at the World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from...

Words: 5154 - Pages: 21

Premium Essay

The Three Views

...The Three Views and WTO Globalization has extended the opportunities available for economic growth leading to extensive lobbying amongst world financial institutions. The high influence of exchange rates has also extensively affected business transactions. The price of commodities, air fare tariffs, foreign exchange levels and export and import licenses have been affected across world markets. The World Bank, major banking institutions, World Trade Organization and UN agencies have converged to control the world markets from various levels due their extensive consultations and economic persuasions on vital financial matters. The economic control by these organizations has also lead to political and social influences amongst various nations across the world. Most countries’ sovereignty has been weakened especially amongst third world countries has they depend on financial support from these organizations for their financial stability (Gregory, 2000). The three main economic principles, economic liberalism, nationalism and structuralism can be used to analyze the functioning design and operation of WTO. Let us look at each of these perspectives and how they can be used to explain design of WTO: Economic liberalism, a principle that supports laissez faire economics also greatly values private property in production. It analyses the specific institution that produce a certain commodity e.g. wine production in Italy. The principle refutes the intervention of governments in...

Words: 1911 - Pages: 8

Premium Essay

Products & Services for Consumers

...The purpose of the agreement was to promote international trade free of barriers in the aftermath of World War II, and to draw up proposals for the implementation of policies based on those principles set in the agreement. It covered all the issues like tariffs, quotas, taxes, international commodity agreements and whatever was considered to have a bearing on the development of international trade, and was based on policies of non-discrimination and tariff reductions. GATT has been expanded and updated through a series of multi-year conferences. The most famous have been the Kennedy Round (1963-1967), the Tokyo Round (1973-1979), and the Uruguay Round (1986-1994). The Uruguay Round ended with the decision to dissolve GATT and establish the more powerful and more institutionalised World Trade Organization (WTO) in 1995. The WTO replaced GATT as an international organization, but the General Agreement still exists as the WTO’s umbrella treaty for trade in goods. Trade lawyers distinguish between the GATT 1994, the updated agreement, and the GATT 1947, the original agreement which is still the heart of GATT 1994. Introduction The WTO has nearly 150 members, accounting for over 97% of world trade. Around 30 others are negotiating membership. By definition, the World Trade Organization (WTO) deals with the rules of trade between nations at a global or...

Words: 5427 - Pages: 22

Premium Essay

China and Wto

...Frequency on Class: Method and Criteria of Assessment: 100% Coursework (5000 words) Essay Submission Deadline is 4pm, Wednesday 27 November 2013 Topics: Please choose one area listed below and discuss its recent development in the context of China. You will need to narrow down your focus and set your own essay topic. 1. 2. 3. 4. 5. Non-market Economies in the WTO Energy Industry and the WTO Environment and the WTO Commentary on one WTO case involving China Self-selected topic upon approval (You are most welcome to decide a topic yourself. Once you decide to do so, however, you need to submit your topic and an one-paragraph abstract before 4pm 31 October. ) Module Aims: To give the students a broad knowledge of the multilateral trading system and China’s interaction with that system through focusing on several key sectoral topics. The module will also reinforce and extend the student’s knowledge of the business environment in China gained from other modules. Nottingham University Business School China WTO Module Outline 2 Summary of Content: The course will cover all of the primary WTO agreements, and address some of the more recent issues arising in public debates...

Words: 3456 - Pages: 14

Premium Essay

World Trade Organization

...Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. It is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The World Trade Organization came into being in 1995. One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War. The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. Trade friction is channelled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform with them. That way, the risk of disputes spilling over into political or military conflict is reduced. By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations. At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified...

Words: 734 - Pages: 3

Premium Essay

Wto Trading Principles

...M. & Kostecki, M. M. (2009) identified the following as major reason for the creation of WTO in 1995 - Administer trade agreement (GATTs, GATs and TRIPs) - Dispute resolution - Monitor national trade policies of members’ country For WTO to achieve the above mandate efficiently and effectively, the WTO uses the trading principles below (Justin, n.d) - Trade without discrimination - Freer trade: gradually, through negotiation - Predictability: through binding and transparency - Promoting fair competition - Encouraging development and economic reform The purpose of this assignment is to write a brief note on these identified principles. Trade without discrimination Trading without discrimination has the following principles It is expected that country should not discriminate against her trading partners - Most favored nation (MFN) which focusses on ensuring that country does not discriminate between countries by favoring one country to the other. It is expected that countries shall be treated equally. This principle is applicable to GATTs, GATS, TRIPS. Even though, there exist 3 exceptions free trade agreement between goods traded within groups, granting of market access to developing countries and raising barrier against products that are traded unfairly by a country e.g. counterfeiting and dumping. The general principle is that same treatment is applicable to all trading partners. - National treatment focusses on ensuring that country does not discriminate...

Words: 590 - Pages: 3

Premium Essay

Abcd

...Trade Organization? Born in 1995, but not so Young Simply put: the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that. 1.The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system. Is it a bird, is it a plane? There are a number of ways of Looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. (But it’s not Superman, just in case anyone thought it could solve- or causeall the world’s problems!) Above all, it’s a negotiating forum … Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001...

Words: 10249 - Pages: 41

Premium Essay

World Trade Organization

... Summer 2008 Term Paper – World Trade Organization (WTO) TABLE OF CONTENTS 1.0 INTRODUCTION 4 1.1 What is WTO? 1.2 History of WTO 1.3 Mission 1.4 The Structure of WTO 2.0 WTO SYSTEMS 11 3.0 CONITIONS FOR MEMBERSHIP 17 4.0 OBJECTIVES OF WTO 24 5.0 WTO DISPUTE RESOLUTION SYSTEM 27 5.1 Governing Principles 5.2 Stages Of Dispute Resolution 6.0 SUCCESS AND FAILURES OF WTO 29 7.0 WTO AND 3RD WORLD RELATED ISSUES 35 7.1 Who are the Least Developed Countries? 7.2 Who Are the Developing Countries? 7.3 Issues Relating to 3rd World Countries 7.4 Action Plan for the Least Developed Countries 8.0 CHALLENGES FACED BY WTO 42 8.1 Overloading the WTO 8.2 Decision Making 8.3 The role of overlapping unimplemented commitments from the Uruguay Round with new issues from the Doha Round 8.4 Regionalism 8.5 Eroding national sovereignty 8.6 Asymmetry between goods and service liberalization 8.7 Protecting intellectual property 8.8 Asymmetry between public and private trade restrictive Measures 8.9 Shooting at a moving target: Protectionism in disguise 8.10 Doha Development Agenda 8.11 A Healthy WTO 8.12 Timeliness and Politics 8.13 The Alternative to the Doha Round 8. 14 Next Steps for the WTO 9.0 OVERCOMING THE CHALLENGES 58 10.0 CONCLUSION 59 11.0 REFERENCES...

Words: 17652 - Pages: 71

Premium Essay

International Trading

...trade. According to World Trade Centre, there are 10 benefits of International trade which includes (1) the system helps promote peace, (2) Disputes are handled constructively (3) Rules make easier for all, (4) Free trade cuts the costs of living (5) It provides more choice of products and qualities, (6) Trade raises income, (7) Trade stimulates economic growth, (8) The basic principles make life more efficient (9) Government are shielded from lobbying (10) The system encourages gooog government. (1) The system helps promote peace According to WTO, Peace is the most fundamental of trading system. It helps trade to flow smoothly, easier for countries dealing with disputes over trade issues, and an outcome of the international confidence and cooperation that the system creates and reinforces. (2) Disputes are handled constructively In the trading system, the more trade means more opportunties for disputes to arise. These international trade system is reduced because countries can turn to organzations, in particular the WTO, to settle their trade disputes. For example, around 300 disputes have been brought to WTO since it was set up in 1995. In many cases, countries in dispute always aim to comfort with the agreements. (3) Rules make easier for all Smaller countries enjoying more bargaining power and life is simpler for bigger countries.The WTO cannot claim to make all countries equal. But it does reduce some inequalities, giving smaller countries more voice...

Words: 511 - Pages: 3

Premium Essay

Wto and Its Effect

...so as to bring about all around economic prosperity. The Preamble to the GATT mentions the following as its important objectives: 1. Raising standard of living. 2. Ensuring full employment and a large and steadily growing volume of real income and effective demand. 3. Developing full use of resources of the world. 4. Expansion of production and international trade. For the realization of its objectives, GATT has adopted the following principles: 1. Non-discrimination: the principle of non-discrimination requires that no member country shall discriminate between the members of GATT in the conduct of international trade. To ensure non-discrimination the members of GATT agree to apply the principle of the most favoured nation (MFN) to all import and export duties. This means that each mission shall be treated as well as the most favoured nation. As far as quantitative restrictions are permitted they too are to be administered without favor. However certain expectations to this principle are allowed for instance GATT, does not prohibit economic integration such as free trade areas or customs union, provided the purpose of such integration is “to facilitate trade between the constituent territories and not to raise barriers to the trade of other parties.” GATT also permits the members to adopt measures to counter dumping and export subsidies. 2. Prohibition of quantitative restriction: GATT rules seek to prohibit quantitative...

Words: 8034 - Pages: 33

Premium Essay

Green Trade Barriers

...An example of effective negotiations is the settlement of the U.S. complaint alleging a Chinese violation of the national treatment concept by its preferential treatment of domestic products over "like" imported products. ... Cooperative trade relations between the United States and China are important to the global community because the economies of each country are dependent on the rest of the world and the global economy will be harmed by protectionist measures from the first and third largest trading powers. ... Moreover, multilateral negotiations, as opposed to bilateral trade negotiations, are better suited to resolve the United States-China trade disputes because the disputes affect other WTO members in ways beyond the immediate economic impact. ... The most effective way to combat the rapid escalation and retaliatory nature of the disputes is to conduct multilateral negotiations that will preserve the WTO's goal of reducing trade barriers, avoid the adversarial nature of WTO litigation, and allow the countries to negotiate the underlying political tensions that are driving the disputes. TEXT: [*403] I. Introduction China and the United States have waged an ongoing legal battle over trade policies since 2006,...

Words: 11849 - Pages: 48

Premium Essay

World Trade Organisation

...The world trade organization is an organization can be looked at in a number of ways; firstly the WTO is an organization for trade opening; a forum where governments discuss trade agreements; and as platform for solving trade disputes. Further on, the WTO functions as a system of trade rules and as a place where member states sort out their trade issues among themselves. This organization was founded out of negotiations and its modus operandi is that of negotiation. Today, most of WTO’s current operations stem from the Uruguay Round as well as other negotiations under the General Agreement on Tariffs and Trade (GATT). It is currently hosting the new negotiations that were birthed from the “Doha Development Agenda” of 2001 (Wto.org,. 2014). Where states have been confronted with trade barriers and want them lowered, deliberations at the WTO have facilitated opening of markets for trade. In conjunction, the WTO is not only about opening of new markets, it also supports maintenance of trade barriers- for instance where consumer rights are threatened or to prevent harm to the consumers. At the core of WTO are the agreements that have been negotiated and sealed by the majority of the world’s trading states. These agreements present the legal guidelines for international trade. They are in essence contracts that bind governments to maintain their trading rules within the set limits (Wto.org,. 2014).. While they are signed and negotiated by states, the aim remains to help the providers...

Words: 3037 - Pages: 13