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International trade and investment

International trade and investment
Student’s Name
Institution

International trade and investment

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World Trade Organization.
The World Trade Organization (WTO), which originated from the General
Agreement on Tariffs and Trade (GATT), refers to the only global international body that
deals with trade as well as the rules governing trade between nations. It was founded between
1986 to 1994 from a series of negotiations referred to as the Uruguay Round and later
established in January 1995 (World Trade Organization, n.d). Its headquarters are located in
Geneva, Switzerland, and it is currently headed by Roberto Azevedo, who is now the sixth
director-general. It comprises 164 members, meaning it takes up the role of a representative
for 98 percent of the world's trade
Being a WTO member entitles one to a series of benefits such as enjoying reduced
trade tariffs and other barriers to trade among its members. WTO administers trade
agreements, holds trade forums for negotiations, and handles trade disputes which are
resolved through a dispute resolution process. Training and technical assistance are also
offered for the new members, as well as low-income and developing countries (Lawrence,
2004). WTO discourages discrimination between trading partners, and it is committed to
offering protection against the dumping of cheap surplus goods as well as offering an
exception for national security, environmental protection, and other important goals. The
advantages of promoting free trade are; lowers prices for the consumers, encouraging of high
competition amongst different firms, increased economic welfare due to the law of
comparative advantage, and lastly by advocates for free trade firms can specialize band
produces high quantity due to economies of scale.
One key disadvantage is that, although the trade barriers and tariffs have been reduced
by the WTO, the promise of economic growth being boosted, incomes increased, and poverty
reduction as a result of free trade has been questioned a lot. The WTO has also been criticized
for imposing trade rules that remain unfavorable to developing countries considering many

International trade and investment

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developed countries experienced a period of tariff protection which enabled them to protect
new infant domestic firms. Free trade, on the other hand, may stop developing economies
from promoting infant industries due...