The World Trade Organization

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The World Trade Organization is widely known as an organization that deals with free trade on an international level. Quoting from their website, “the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.” (Source 1). In general to enter into the WTO, a country must meet certain criteria that deal with liberalization of trade policy. (Source 2? More like a general). As a member of the WTO, countries must adhere by rules and regulations set. In effect this liberalization is enforced to promote trade across all countries. To understand the effect that the WTO has on an economy, one must look at the different countries that are in it. In general there are two types of countries; developing countries and developed ones. Although this is a generalization, it is a basis for understanding the WTO and how different countries are treated. One of the main effects the WTO has on an economy is the liberalization of trade restrictions. In general, more industrialized countries have reduced their tariffs by a bigger percent than those less developed. (source 1) These countries have to decrease certain tariffs by a certain amount in order to become a full member of the WTO. These liberalized trade restrictions help open up countries to increased trade. In general, this open economy forces countries to become more competitive and efficient. This effect is echoed in not only in trade but also domestic policies. Firms must become much more efficient in order to become competitive in the world markets. Another general effect is the increase in foreign investment. The increase in technology and ideas gained from opened trade increases the competitiveness of a... ... middle of paper ... ... that will need to be watched over carefully. Without help, Agriculture will take a huge hit from foreign competition. An example of this would be the rice industry. Following Japan and Korea, Taiwan will put a quantitative quota on importing rice and other certain products. This quota will help buffer the negative effects the agricultural sector could be hit by. (Source 3). Taiwan also expects a moderate increase in unemployment due to the open competiveness of these policies. Some firms will not be able to sustain themselves in this new market. This will shift capital away from these firms to those that are competitive on the open market. Ideally these negative aspects will be outweighed by the positive effects of trade. The main goal for Taiwan would be to hold a comparative advantage in certain industries and import products that they are not as specialized in.
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