Essay On Free Trade

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The World Trade Organization (WTO) formerly the General Agreement on Tariffs and Trade (GATT) was created on January 1, 1995. Its goal is to promote the practice of free trade globally. According to the WTO website, it is, “an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules.” This paper will explain the benefits of free trade and membership in the WTO while arguing whether membership is better for developed or undeveloped countries. Additionally, remedies will be suggested to make membership better for all. To some extent, the WTO has been successful at promoting better free trade. Free trade has many advantages including first, lower prices for consumers by removing tariffs enabling us to buy cheaper imports. Second, free trade encourages greater competition. There are more incentives to cut costs as for example, a monopoly in the U.S. may face competition from foreign companies. Third, the law of comparative advantage says that free trade will enable an increase in economic welfare. This allows countries to specialize in producing goods and have a lower opportunity cost. Fourth, it encourages fair trade allowing economies of scale where companies specialize and produce higher quantities. Companies such as car and airplane manufacturers with higher fixed costs especially benefit. Fifth and finally, free trade can help increase overall global economic growth. The question remains, though, “Is a WTO membership better for developed or undeveloped countries?” To begin to answer that question, it’s important to note something; the WTO was created by several core countries that were developed. Could th... ... middle of paper ... ...g countries’ needs and interests at the heart of the Work Programme adopted in this Declaration,” they said. “… We shall continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. In this context, enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play.” By continuing to expand the special and differential (S & D) treatment of the undeveloped countries, they can at least bring a bit more fairness to membership in the WTO. The best solutions to global economic problems have to come when the best model of global competiveness between all countries is one of absolute and genuine competition.

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