1. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side effects — because this is important for economic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be ‘transparent’ and predictable. 2. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers — for example, to protect consumers or prevent the spread of disease. 3. Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. Positive consequences: more competitiveness in the world market and more benefits for less developed countries. Source: WTO (http://www.wto.org/english/thewto_e/whatis_e/what_stand_for_e.htm)
Theorists tend to view tariffs as distortions to the free market; Typical analyses find that tariffs tend to benefit domestic producers and government at the expense of consumers; net welfare effects of a tariff on the importing country are negative; Normative judgments often follow from these findings, namely that it may be disadvantageous for a country to artificially shield an industry from world markets, and that it might be better to allow a collapse to take place.
Open Markets Matters An open trading system is vital for global prosperity and smart economic policies: more open economies grow much faster than closed ones and trade can be a...