This essay will provide an in-depth analysis of the existence of the WTO; how it came into existence, its objectives and what it fundamentally stands for. Criticisms of the organisation will be debated against the benefits and a conclusion will be reached explaining why the WTO is an effective promoter of free trade among its member states irrespective of the existing criticisms. With the introduction of the World Trade Organisation (WTO) in 1995, in an attempt to promote free trade among member states, there have been many criticisms and costs associated with the organisation. Criticisms of the WTO include the WTO being viewed as undemocratic on the basis of policies being written by, and for corporations with inside access to negotiations, it is also believed by some that the WTO tramples labour and human rights, would privatize essential services such as education, health care and energy and it is an organisation that huts the poor, small countries in favour of rich powerful nations. Despite multiple criticisms, the WTO is favoured by some on the basis that it promotes free trade which in turn will help keep the peace between nations by helping trade flow smoothly and dealing with disputes over trade issues in a controlled environment. It stands to reduce inequalities being governed by rules rather than power, with the achievement of free trade the cost of living will stand to reduce, and consumers will be given more choice with a broader range of qualities to choose from. The WTO will increase incomes through the stimulated economic growth that will also lead to an increase in employment. Overall the system encourages the development and maintenance of good government.
Unrestricted free trade is supported by sturdy economic arguments. Many governments across the globe have recognised these arguments, however, fear of nations worldwide failing to follow, has meant that many governments are reluctant to singly lower their trade barriers. Hill (2009) highlights the issues that could arise between two countries in consideration of lowering trade barriers between them by looking at Argentina and Brazil. The government of Brazil may be in favour of reducing trade barriers, but would hesitate to do so in case the Argentinian government fail to do the same. There could be a fear that the Argentinian’s would take advantage of the low barriers in entering the Brazilian market and continue to shut Brazilian products out of their market through high trade barriers. Similarly, the Argentinian government may fear the same outcome. This problem is derived from a lack of trust among countries. It is recognised by both countries that they stand to benefit from lower trade barriers between them, however neither government will agree to lower trade barriers in fear that the other will not do the same. (Dixit & Nalebuff, 1991).
Such predicaments can be sidestepped and resolved if both countries negotiate a specified set of rules to govern cross-border trade and lower trade barriers. This is where the World Trade Organisation (WTO) has derives. The WTO monitors governments’ to sure that they are obeying trade rules, whilst simultaneously imposing sanctions on those governments who fail to conform to the rules. (Hill, 2009).
Originally envisioned as the General Agreement on Tariffs and Trade (GATT) in 1948, which focused on objectively liberalising trade through the elimination of trade barriers, subsidies, import quotas etc., (Hill, 2009). The WTO is a developed overseer of the trading system since 1995, which incorporates the GATT along with two additional bodies, one that focuses on extending free trade to services, and the other on grounds of narrowing gaps in the way intellectual property rights are protected around...