Financial & Commodity Organization Role in International Trade

Financial Organization Role in International Trade

Introduction

The World Trade Organization (WTO) is the sole international organization dealing with multilaterally agreed rules on trade among its member countries. Through WTO agreement, which spell out rights and obligations, member countries operate a nondiscriminatory multilateral trading system that has allowed world trade to grow. The goal is to help producers of goods and services, and exporters and importers, conduct their business in a manner that ensures predictability and stability. This paper is intended to provide an understanding of the WTO system and its implications to government policies and international business. It is hoped that the business community will take a keen interest on WTO issues and reap the benefits from the rules and disciplines as well as the market access opportunities created under the WTO.

Discussion

Financial markets are almost fully globalize and are largely operated by electronic devices. The combination of cheap, easy communications and massive stocks of short-term capital has made these markets international and volatile, responding to every expectation of future movements in interest and exchange rates. Many service industries are globalizing. Accounting firm and legal firms were early movers in this development. Since then, the ability to communicate instantly around the world has allowed many service activities to relocate. The information and communication technology revolution has made it possible for many service firms in developed nations to provide services to other countries in a wide range of activities including architecture, education, factory and product design and management consultancies. Services are already close to a third of total exports in several industrialized countries, and rising.

Many corporations are regionalizing, developing presence across Europe, or North Americas, or the Asia Pacific, with some presence outside their own areas. More and more corporations are globalizing and are increasingly coordinating their production and trading activities within a network of cross-border, internal and external relationships which serve their global strategic interests.

Trade and Tariffs

The WTO allows members to determine their own tariff rates for all types of products within the jurisdiction of their national policies. Members can impose tariffs and make amendments to them in accordance with their respective national policies.

In the WTO however, members have agreed, through successive negotiations, to bind tariffs at particular levels. In respect of products covered under the binding commitments, members can only raise tariffs up to the bound levels. For products not included in the bound schedule, there is no upper limit set for tariff that may be imposed. Members can also raise the tariff above the bound rate if they can offer compensatory concession in some other items.

Trade and Competition

The objective of the trade and competition policy is to have markets that are, to as great an extent as possible, competitive. Competitive markets mean markets where resources are allocated efficiently in the economy and national welfare is maximized. Consumers pay an optimal price for goods and services (equal to the resources used to make them) because sellers must compete with each ...