world trade
Table of Contents 1) Introduction 2) WTO Trading System 3) Concept of Comparative Advantage 4) The GATT 5) Differences between the GATT and the WTO 6) Agreements 7) Future Issues for the WTO 8) Conclusion The World Trade Organization 1) Introduction The original trade system, the General Agreement on Tariffs and Trade (GATT), began in 1948. The GATT set forth the foundation for what we know now as the World Trade Organization (WTO). The WTO began on July 1995 and set the laws or the rules for trade between nations. ... Establishing these rules for trade, the WTO purpose is to keep business flowing between nations, serve as a mediator between nations during disagreements and to participate as a forum under trade negotiations. ... Some of the ideas behind the trading system are: · Free trade – barriers such as tariffs decrease trade because of the high cost to imported goods. By removing these costs, nations are encouraging trade. ... Knowing what you are getting into can encourage trade because a company can see into the “future”. ... · Economic reform – Increasing business through trade will help improve the economy for trading nations. Because developing countries receive special assistance and trade concessions they are more likely to participate in the market economies. Through trade developing countries could benefit from the business increase and employment opportunities. 3) Concept of Comparative Advantage The concept behind the open trade system was that of one where every country has some assets that they can use to produce goods. ... 4) The GATT The idea behind the GATT was to create an International Trade Organization, but with the outdated laws and issues, the GATT needed to be reformed. ... It is clear that the importance of an organization was detrimental to the success of international trade. The reduction of tariffs helped increase trade. ... I think it is imperative to note how important tariffs were to the concept of “free trade” among nations.