The World Trade Organization

This paper presents arguments in favor and against the world trade organization. The World Trade Organization (WTO) is an international organization where member nations can discuss issues and settle disputes related to international trade as well as negotiate trade agreements. The WTO was formed on January 1, 1995, as an offshoot of the General Agreement on Tariffs and Trade (GATT) and currently has 148 member nations. Its headquarters are located in Geneva, Switzerland. While the WTO seeks primarily to lower barriers to international trade and investment, it recognizes the need, under certain circumstances, to restrict trade in order to protect consumers and prevent the spread of disease (Crowley, 14).

One of the key principles of the WTO is the most favored nation (MFN) treatment, which means that a member cannot discriminate among other member nations (Crowley, 15). If a country offers lower tariffs to one country, then it must offer equally favorable tariffs to all WTO member nations. Reciprocity is another key principle of the WTO framework. Under reciprocity, when one country proposes to reduce one of its tariffs, another country responds by proposing to reduce one of its own tariffs. Reciprocity and nondiscrimination help to expedite the lowering of trade barriers (Crowley, 16).

Arguments in Favor of WTO

The exponents of the WTO provide the following reasons to justify why the organization should exist in its current form.

Trade Negotiations

The WTO provides a forum for multilateral trade negotiation, which is bolstered by its principles of nondiscrimination and reciprocity. Nondiscrimination hastens trade liberalization by eliminating the need to negotiate the same tariff agreement with each individual country. Nondiscrimination also improves economic efficiency by eliminating the prospects of trade diversion and trade rerouting (Klein, 89). Trade diversion occurs when a country does not import from the lowest-cost exporter because it has high tariffs on exports from that country (Gordon, 46).

Trade Disputes

Any member nation can dispute another nation's trade policy through the WTO. Without this option many countries might be less willing to enter trade negotiations since there is no other way to enforce the agreement (Klein, 90). The WTO attempts to settle disputes through negotiation. However, if negotiations fail, a panel is appointed to make a preliminary judgment (Klein, 91). That judgment is either accepted or rejected by the WTO membership. This process can take upwards of one year. The country losing the dispute then has the option to appeal the decision, which could extend the process by another three months (Gordon, 47).

Both sides have the right to rebut each other's claims both in writing and through oral arguments. The dispute panel may make use of expert witnesses if either side presents scientific or technical arguments (such as health or environmental concerns over certain imports). According to the WTO, only about one-third of all cases reach the full panel process, indicating that countries prefer to settle their disputes through negotiation when possible (Klein, 92).

Free Trade and Nondiscrimination

The WTO does make a few exceptions to its commitment to free trade and the MFN ...