World Trade Organization Analysis

Trade can be explained as the exchange of goods and services between two different interested parties. World trade organization is an international institution that uses its set of rules to regulate business or commercial activities among its member countries. It’s also an institution that provides a platform that governors from member countries meet and air their views on how to improve trade within their countries as well as try to solve trade difficulties among member countries. Although this kind of trade i.e. international trade can be dated back in 1948 where the institution was known as the General Agreement on Tariffs and Trade (GATT), the World Trade Organization was founded in 1995 with a wider range of aims unlike the (GATT)

In other words sellers will relate friendlier to buyers and vice versa since both parties benefit from each other so the relationship so mutual despite them coming from different countries. For instance before the second world war countries lacked confidence and trust between themselves.in so doing they started competing by building trade barriers with the aim of trying to protect their locally produced goods. This in turn led to the great depression that sparked the second world war.as a way to promote peace the countries involved created the (GATT) .This institution helped countries gain trust in each other thus expanded to become what we call now the World Trade Organization (Alexander, K. (2008). The World Trade Organization and trade in services. Leiden: Martinus

Unlike in the era of the great depression where countries created trade barriers to promote its local products, it’s proved to be more expensive as compared to free trade. This is because a country is able to negotiate with a member country on its imports therefore making it cheaper to import and this in turn will lead to cheaper end products from the cheap imported raw materials thus cutting down the cost of living

Promotes rise in income. Due to the free trade countries are able to get a variety of products from the cheap imports. Since the imports are cheap like raw materials the end products are also going to be cheap and this in turn makes it easier for countries citizens to afford them therefore creating a surplus income. Also private companies are able to afford raw materials at a lower cost from its government and this in turn will enable the end products more affordable to its citizens thus rises the standards of living through a rise in income.