The WTO

During the worldwide depression of the 1930s, when one nation raised its tariffs to protect its industries, other nations retaliated by raising their tariffs. In 1947, most of the world’s industrialised nations mutually agreed to end the tariff wars by signing the General Agreement on Tariffs and Trade (GATT). The GeneralAgreement on Tariffs and Trade, an internationally organization set up in 1947, had the objectives of encouraging international trade, of making tariffs the only form of protectionism, and of reducing these as much as possible. The final GATT agreement – including services, copyright, and investment, as well as trade in goods – was signed in Marrakech in 1994, and the organization was superseded by the World Trade Organization (WTO) in 1995.

Nowadays the WTO has more than 150 members. The WTO is staffed by an international team of trade specialists. It can influence international trade discussions, almost always in a free-trade direction, although on controversial issues member governments are likely to dig in their heels before making any compromises or deals. The WTO Dispute Settlement Body can intervene when one country accuses another of breaking agreed WTO rules. It normally does this by initiating some sort of protectionist measure. Like the GATT the WTO provides a forum for multilateral trade negotiations; conducts reviews of member country trade policies; and cooperates with the World Bank and the International Monetary Fund (IMF) in an attempt to achieve greater coherence in global economic policy making.

Ex. 1. Complete the paragraph, use the following terms:

The WTO was set up in 1995 to encourage free trade in the global market place. It is therefore designed to resist …. No new barriers to trade can be set up, and governments cannot set new … or … or increase ones that already exist as there are really taxes that prevent …. Similarly the WTO opposes the use of … since these limit the amount of … coming into a country. This may protect a country’s industry in the short term, but if its trading partners reply with similar measures, then … will suffer. The WTO governs trade in many products and raw materials, but the world of finance is largely outside of its scope, therefore it has no control over ….

Ex. 2. Circle the terms below which encourage the movement of goods across borders, explain your choice.

Favourable exchange rates, customs duties, WTO, tariffs, import quotas, protectionism, free trade agreements.

Ex. 3. Answer the questions about the information in the text.

1. When do most of the world’s industrialised nations mutually agree to end the tariff wars?

a. in 1941;

b. in 1952;

c. in 1947.

2. What objectives did the General Agreement on Tariffs and Trade have?

a. encouraging international trade;

b. making tariffs the only form of protectionism;

c. reducing these as much as possible;

d. all of the above.

3. What did the most favoured nation clause of the GATT agreement specify?

a. that countries could not have favoured trading patterns;

b. countries had to grant equally favourable conditions to all trading partners;

c. both a) and b).

Ex. 4. Dwell on the following issues.

1. What are tariff wars?

2. When was the GATT superseded by the World Trade Organization?

3. What are the functions and the structure of WTO at present?

4. What world organizations does WTO cooperate with?