World Trade Organization is an international organization that deals with the global rules of trade between nations. It ensures that trade flows freely and smoothly. WTO came into being in the year 1995, and it’s the successor to the General Agreement on Tariffs and Trade which was established when the Second World War started, Appleton)
The world trade has significantly been growing for the past 50 years. In a year, the growth of the merchandise exports was 6%. GATT and the WTO have created a flourishing and robust trading system which contributes to unprecedented growth.
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Advantages
Greater competitiveness is encouraged by free trade; Organizations face a higher incentive to cut costs. Free trade can also help increase global economic growth ( Macrory, Appleton and Plummer, 2005) .
Consumers pay lower prices; When the tariffs are removed, it enables them to cut costs. Free trade can allow an increase in the welfare of the economy as stated in the law of comparative advantage because when countries have a lower opportunity cost, they can specialize in producing goods. It’s also important for organizations with high fixed costs.
Disadvantages
WTO has often been criticized for ignoring the perplexity of the developing world. Developing economies may be prevented by free trade to establish their infant industries. It has been argued that the developed world enjoy the benefits of free trade mostly.
Dispute settlement
Consultation takes up to 60 days whereby before taking any actions, the countries in dispute have to communicate to each other to see if they can solve their differences without adding a third party.
If the consultation fails, the country that is complaining can ask for a panel to be appointed. The conclusions of the board are difficult to overturn since consensus in the DSB can reject their report ( Macrory, Appleton and Plummer, 2005) .
In 2015, the WTO dispute settlement system was so busy where it had 30 active panels monthly. It also received its 500th trade dispute for settlement. The DSB received 13 requests for consultation over the year, whereby more than a half of them from developing countries.
Reference
Macrory, P. F. J., Appleton, A. E., & Plummer, M. G. (2005). The World Trade Organization: Legal, economic and political analysis . New York: Springer.
