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Study Notes

The World Trade Organisation.

AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 22 Mar 2021

The WTO exists the encourage and facilitate the liberalisation of trade between countries. The WTO deals with the rules of trade between nations at a global or near-global level.

Key Points on the WTO

  • The World Trade Organisation (WTO) is a multi-lateral organisation based in Geneva, Switzerland
  • The WTO was established in 1995 and was preceded by the General Agreement on Tariffs and Trade (GATT).
  • It helps to promote free trade by persuading countries to lower their import tariffs and other barriers to open markets including widespread use of import licences, export subsidies and other non-tariff barriers
  • Membership of the WTO has expanded with the successful admission of China, India and latterly, Russia to the WTO as events of global significance.
  • WTO membership accounts for 98 per cent of world trade in 2014 compared with 91 per cent in 1995

Key Challenges Facing the WTO

Complexity of production:

Countries and producers increasingly specialise in certain stages of production depending on their competitive advantage. This incentivises countries to pursue bi-lateral trade agreements (between two countries) rather than agree multi-lateral (between many countres) trade deals

Shifting global economic power:

A big challenge for the WTO is to help meet the aspirations of emerging economies and overcome strains in trade relationships with developed nations

Fragmentation of the global trading system

A big risk for the WTO is that regional trading blocs are by passing attempts to secure a new global trade deal.

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