The World Trade Organization

Question 1

World Trade Organization (WTO)

Answer 1

Was set up in 1995 by the signatories to the Uruguay Round to replace GATT.

Question 2

Two Main Functions of the WTO

Answer 2

To encourage countries to lower protectionist barriers and thus increase trade between countries. So the WTO exists to bring about trade liberalisation

To ensure that countries act according to the various trade agreements they have signed. Any country or group of countries can file a complaint with the WTO against competitive practices of another country. The WTO attempts to resolve most complaints through negotiations between the two parties. Ultimately, though, the complaint can go to a panel of experts (effectively an international court), and this panel will deliver a judgement. Either side can then appeal against the judgement. However ultimately they must accept the WTO ruling. If they reject the ruling, the country which wins the ruling has the legal right to impose trade sanctions against the exports of the losing country to impose the same damage to trade that it is suffering. When this has happened, the losing country has quickly gone back to the negotiating table.

Question 3

Trade Liberalisation

Answer 3

The move towards greater free trade through the removal of protectionist barriers to trade.