INTERNATIONAL BUSINESS AND POLICY

International Business and Policy

International Business and Policy

Introduction

International business has been increasingly frequent since industrialisation. Today globalisation becomes well-known among people. As economies have become more open, countries become more dependent on one another. However, rarely is free trade truly free trade due to country interventions which aim to promote industrialisation or national interests, or protect employment or consumer (Morrison 2006). In an interdependent world the actions of one country has consequences for others. Hence The World Trade Organisation (WTO) has grown in importance because globalisation expands and countries become inter-dependent. WTO is the international body responsible for oversight of trade between nations.

The paper will first check the role that the WTO plays in international business. This is followed by "argue the case that the WTO is helpful rather than a hindrance to international trade", supported by particular examples. These two issues will then be covered in this essay.

Information collected for essay is from various existing sources (second data), e.g. Internet, related textbooks (especially books talking about international business and similar topics), Journal articles, newspaper, and so forth.

Limitations of this essay include: First, as this is the first time for the paper to systematically research WTO, he may not provide a very professional discussion for the topic typically due to time restriction; second, the paper will argue that the WTO is helpful rather than a hindrance to international trade, which may not be supported by many others as WTO does have encountered some criticism that may be unfavourable to the paper's point of view.

The role that the WTO plays in international business

The origin of WTO

The WTO was formally established in January 1995 by the GATT which was instituted in 1947 with members of over 110 countries as of the end of 1994, Uruguay round of negotiations (WTO, 2008). WTO was established because GATT member states recognised that increasing world trade necessitated a stronger institutional framework with more legal standing (Hoekman and Kostecki, 1995). As of 23 July 2008, the WTO has 153 member states with headquarters in Geneva, Switzerland (WTO, 2008).

Roles and functions of WTO

WTO's primary role/objective is to ensure that trade flows freely between nations based on the GATT principles of open trade that includes trade without discrimination, gradual transition to free trade through negotiation, predictability through transparency and binding agreements, promotion of fair competition and encouraging development and economic reform (Daniels, 2000). In other words, WTO acts as a common institutional framework and associated legal instruments to conduct trade relations among member nations (WTO, 2009). This can be further divided into five functions, including:

Administering WTO trade agreements: WTO administers WTO trade agreements. Important agreements include GATT 1994, Agreement on Agriculture, Agreement on Rules of Origin, Agreement on Anti-Dumping, and Agreement on Safeguards.

Providing a forum for trade negotiations: This aims to remove trade barriers through negotiations. Non-WTO members can be members through negotiation during which they have to agree to make their national legislation in conformity with the WTO's multilateral agreements rules, and promise to reduce ...