The World Trade Organization (WTO) and the World Trade System have altered the national economies globally through internationalization. In the past sixty years global trade has developed by 6% annually. As a result, the tremendous growth in international trade has contributed to globalization since the production and consumption of goods has been internationalized. Political structures such as the World Trade Organization have played a vital role in the global economy and trade activities as they influence the general agreement on tariffs.
The WTO is made up of 153 member countries. The organization supports its member countries by creating an effective economic platform which allows it to implement trade agreements that governments have approved. In addition to this, the organization has designed forums that are responsible for trade negotiations and provide programs through which governments can resolve trade disputes. WTO is founded on two principles; market liberalism and nondiscrimination. Market liberalism provides members with the economic blueprint for conducting trade activities whereas the non-discrimination principle ensures that the member countries have equal access to trade opportunities.
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The governments in each respective nation that belongs to the WTO make the trade policies through an intergovernmental bargaining process. This process involves debating on agreements that are committed to liberalizing trade and support the primary objectives of the nations. Therefore, when negotiating agreements, the governments must modify policies that restrict free transaction of goods and services across borders. The rules and regulations implemented through the intergovernmental bargaining process create a framework that governs international trade relations.
The WTO requires the governments to adhere to common rules in order to participate in global trade. By establishing a multilateral trade system the WTO demands that all international trade relations are governed by the rules implemented. Similarly, the dispute settlement mechanism established by WTO requires individual countries to comply as they are meant to assist governments in settling disputes. By enforcing rules and regulations, WTO has succeeded in remaining relevant and effective since powers are shared in accordance with the international system. However, the international systems shift between being open and liberal and closed and discriminatory. The hegemonic stability theory is used to identify these shifts by evaluating the logic applied in the provision of goods and services.
Public goods in the international trade system are grouped into two categories; non-excludability and non-rivalry. Non-excludability means that anyone in the market can enjoy the benefits of a good or service once it starts being supplied in the market. On the other hand, non-rivalry implies that the quantity of the goods in the market does not decrease due to the consumption of a particular individual. However, the supply of public goods may be limited when certain individuals free ride. To avoid this, WTO has created policies that ensure that each government benefits equally from the public goods being supplied.
Stringent policies within the WTO have enabled it to overcome some of the challenges faced such as the growth of developing nations to powerful players within the organization, and the rise of NGOs as influential factors outside the organization. These new developments affected the decision-making process by making it complicated and revealed the existing gaps in the government’s abilities to pursue their respective goals through the system. Overall the organization has struggled in establishing rules that protect the environment and consumer needs.
The WTO trends in the past 20 years reveal that the organization continues to strive to advance the interests of industrialized nations as well as that of developing countries. However, in the current global economy, most of global governments believe that they can succeed in the international markets if the world trade creates a liberal and non-discriminating market.
