World Trade Organization: Impact and Challenges

This assignment delves into the complex world of the World Trade Organization (WTO), examining its role in shaping global trade patterns. Students are tasked with analyzing the WTO's impact on economic development, environmental sustainability, and labor standards. The assignment also explores the challenges facing the WTO, such as protectionism, disputes between member countries, and its ability to adapt to evolving global economic realities.

THE PRINCIPAL CAUSES OF CURRENT CRISS IN THE WORLD TRADE
ORGANISATION
Student’s Name
Course ID
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EXECUTIVE SUMMARY
In this study paper, the current crisis scenario of the WTO regarding the 2017 Trade
Policy Agenda of the United States of America has been elaborated. Furthermore, the principal
cause of the issue has been discussed providing evidence. The study reflects how the issue can be
solved to improve the existing condition and restore the positional status of the World Trade
Organisation in front of its members. Meanwhile, in the latest 2017 Trade Policy Agenda, the
governing body of the US Trade has clarified that any efforts by the WTO and its members
restricting the trade benefits and rights of the US will be resisted. Evidently, the major threat that
has been felt from the decision of Donald Trump government is the breakout of the US
government against the policies of the WTO. The current crisis of the WTO may restrict
expansion of global trade and lead to a trade war situation in the US economy. Therefore, a
number of negotiating terms must be defined to tackle the situation.

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Table of Contents
INTRODUCTION...........................................................................................................................3
ANALYSIS......................................................................................................................................4
CURRENT SUCCESS OF THE WORLD TRADE ORGANISATION.....................................4
CURRENT CRISIS IN THE WTO.............................................................................................5
PRINCIPLE CAUSE OF THE CURRENT CRISIS IN THE WTO...........................................6
IMPACT OF THE CURRENT CRISIS.......................................................................................8
SOLUTION TO THE PROBLEM................................................................................................10
CONCLUSION..............................................................................................................................11
Bibliography..................................................................................................................................13

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INTRODUCTION
The World Trade Organisation (WTO) can be identified as an intergovernmental
organisation that plays a major role in the trade settlement of nations regulating trade set up for
manufactured goods and services at the international level. In 1995, the WTO came as a
replacement of General Agreement on Tariffs and Trade (GATT) as the global trading
organisation of the world (Banks 2016). Precisely, the central principle of the WTO is to make
trade-related dispute settlement following a mechanism governed by regulations and legislation.
According to the agreement with the WTO and the members, trade disputes are settled following
multilateral system instead of unilateral action (Eglin 2015). In this particular study, a current
crisis of the WTO has been identified. In the meanwhile, the 2017 Trade Policy Agenda of the
United States of America has contributed towards a crisis situation for the WTO. As per the
latest Trade Policy Agenda of the US, the trade policy to be delivered for the future will resist
any efforts of the WTO or its members that will weaken the trade rights of the US.
Evidently, such stance of the US can be termed as a crisis for the international trade
governing organisation such as the WTO limiting the administrative rights and power of the
international body. In this study paper, the current crisis scenario of the WTO on this particular
issue has been elaborated. Furthermore, the principal cause of the issue has been discussed
providing evidence. In addition, the essay paper has demonstrated the impact of the crisis on the
WTO’s trade frameworks and operational activities (Dajud 2016). Moreover, the study has
identified how the issue can be solved to improve the existing condition and restore the
positional status of the World Trade Organisation in front of its members (Limenta 2012).

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Apparently, the crisis situation will result in the decline in obligation to trade and industry
multilateralism as the rest of members will follow the same suit in the near future.
ANALYSIS
CURRENT SUCCESS OF THE WORLD TRADE ORGANISATION
Previously, it was criticised that international trade has been hijacked or dominated by
richer countries that affects the economic growth of the poor nations. Such evidence leads to
intense criticism and protest. According to Shah (2007), World Trade Organisation is a
significant international body that helps to promote free trade among different economies of the
world by drawing new rules and policies. Furthermore, the World Trade organisation faces
several challenges and issues due to political, economical, socio-cultural, and other factors that
influence the operations of the firm over the global market (Winham 2016). Notably, the WTO
controls the trade operations and policies of different countries that have varied political powers
controlling the ruling chair. Hence, a change in the individual policy of a member country and
shift in the international trade choices may lead to imbalance in international trade and
negatively impact the economic growth of developing nations. Effectively, such policies and
measures are directly related with the economic stability of developed nations (Banks 2016).
The World Trade Organisation is the responsible body for controlling all sorts of trading
operations of both developed and developing nations. The Global Financial Crisis during the
year 2007-08 led to the financial downfall in the entire global economy resulting in a disastrous
situation that resulted in shortage of trade finance (Eglin 2015). Hence, the problem of the GFC
led to a major crisis situation for the WTO during and after that period. In the same manner, the

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issue of agricultural trade policy and political conflicts between different nations were some of
the major factors that have led to crisis situation for the WTO in the past (Winham 2016).
However, WTO had been quite capable in mitigating the issues of unavailability of trade finance
after the Global Financial Crisis and solved the political conflicts between several economies to
promote free trade across the globe. In the same manner, the WTO has faced a new crisis
situation in the current scenario due to the new policy of the US government (Winham 2016).
The change in the mindset of the US government and their policy for international trade has
created different problem for the World Trade Organisation.
CURRENT CRISIS IN THE WTO
The 2017 Trade Policy Agenda of the United States of America has contributed towards a
crisis condition for the World Trade Organisation in the existing state of circumstances. As an
intergovernmental organisation, the WTO has successfully regulated and managed the
international trade for the member nations (Garred 2016). In this recent time, the Trade Policy
Agenda of the US in 2017 has positioned a challenge in front of the international trade governing
body. Under the Trade Policy Agenda of the US, the emphasis has been put on American
sovereignty in trade agreements and policies ("WTO Crisis" 2017). According to the latest Trade
Policy Agenda, the governing body of the US Trade has clarified that any efforts by the WTO
and its members restricting the trade benefits and rights of the US will be resisted (Paletta et al.
2017). Clearly, the new US trade policy has contained norms that are promoting bilateral trade
deals instead of multilateral and regional trade patterns. Moreover, the US trade policy confirms
that the WTO’s rules and regulations cannot force the US to make an alteration in the trade

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policies of the United States of America ("2017 Trade Policy Agenda And 2016 Annual Report
Of The President Of The United States On The Trade Agreements Program" 2017).
Evidently, such trade policy of the US will be a critical issue for the international trade
regulatory body i.e. WTO. According to the economists, such trade policy will encourage the
other members of the WTO to follow the same trend in the upcoming future. The US Trade
Administrative has disregarded multilateral trade engagements as it is not beneficial for the
country’s economic perspective while bilateral trade set up has been more profitable.
Furthermore, the US can be identified as the leading driver of the international trade policy
(Stevis and Assetto 2016). Hence, if the US Trade Administrative will be reluctant to follow the
collective rule-making system of the World Trade Organisation, it will create long-term
economic as well as trade uncertainties as the rest of members of the WTO will follow the same
footprints. In this way, the control and sovereignty of the WTO over the international trade and
policies will be restricted (Umana Dajud 2016).
PRINCIPLE CAUSE OF THE CURRENT CRISIS IN THE WTO
Under the existing circumstances, the administration led by the US President, Donald
Trump has set up latest US Trade Policy stance that has been identified as the principal cause of
the crisis of the WTO. In the past, the WTO has successfully managed the Trade Facilitation
Agreement (TFA) among its members to control the trade of goods. In the current scenario, the
authority of the WTO may reduce as the largest economy of the world; the United States of
America is disrespecting the trade and dispute settlement tactics of the WTO (Grabel 2009).
Evidently, it is the dominance of the US on the global market that has contributed such crisis
situation for the WTO. According to the 2017 Trade Policy Agenda of the United States of

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America, the US will not follow any of the trade related orders carried out by the WTO or its
members if those are limiting the trade benefits and profitability of the nation (Hufbauer and
Jung 2016).
According to Paletta and Swanson (2017), the new trade approach of the US government
is expected to impact the businesses and customers across the globe. The new approach suggests
putting new tariffs against the countries that practices unfair trade in order to develop adversarial
relationship with China and other trading nations. Additionally, the new policy of the US
government will punish the organisations that relocate their production facilities in the overseas
market and sell its products in the US market (Bahar 2017). As per the US President Donald
Trump, the government will use a more aggressive approach in order to enhance its economic
growth and seek better positioning over the global market (Bahar 2017). However, the new
policy of the US government is expected to negative impact the free trade strategy of the World
Trade Organisation. It can be seen through the 336 pages report of the new US Trade Policy
includes a section named as the “President’s Trade Policy Agenda” that presents some of the
possible policies that would break from the international trade policy of the WTO ("2017 Trade
Policy Agenda And 2016 Annual Report" 2017).
The new US trade Policy include a term of putting check over the outsourcing of
production process in the foreign market that would provide better employment opportunities in
the domestic market (Auboin 2017). By considering the case example of Ford Motors, it can be
seen that the company has been forced to cancel the development of its factory sight in Mexico
after the introduction of the new trade policy of the US President just after the election (Colander
2013). Though the new policy is expected to provide better employment opportunity in the US
market, the cancellation of the development of new factory sight in a cost effective location will

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negatively impact the financial model of the Ford Motors and lead to a loss of reputation in the
Mexican market. Hence, the new trade policy of the US government will force the domestic
companies to stop outsourcing their production processes and negative impact the balance of
trade over the international market.
The major threat that has been felt from the decision of Donald Trump government is the
breakout of the US government against the policies of the World Trade Organisation. According
to the article WTO Crisis (2017), the 2017’s Trade Policy Agenda of the United States has
emerged as a major factor leading to a crisis for the World Trade Organisation. Though the
current stories of the WTO organisation depicts the success of the Trade Facilitation Agreement
(FTA) in goods, the beginning of disrespecting the dispute settlement policy of the WTO from
the largest economy of the world would encourage other economies to follow same suit ("WTO
Crisis" 2017). Hence, it can be seen that the changes in the trade policy of the US government is
the major factor leading to the current crisis faced by the World Trade Organisation in terms of
encouraging free trade across the globe.
IMPACT OF THE CURRENT CRISIS
In the meanwhile, the current crisis of the WTO will bring a number of consequences to
be discussed. In this particular section, the impact of the existing crisis of the WTO followed by
2017 Trade Policy Agenda of the United States of America has been described herein below:
 The chance of eliminating TFA in Goods: Since the inception of the WTO, the
organisation has come a long way in setting up global trade agreements between its
members via the Trade Facilitation Agreement (TFA) in goods. In the existing policy
condition of the US, the 2017 Trade Policy Agenda of the United States of America has

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threatened to leave the WTO. During such move, TFA in goods with the other members
may be disrupted as well in the upcoming future.
 Loss of Authenticity in Global Trade Settlement: As the US Trade Policy Agreement
has vowed to follow aggressive trade system for the interest of the US workers, new trade
agreements can be disrespecting for the WTO. As a result of the consequences, the rest of
the WTO members might follow the same suit in the near future that will lead to loss of
authenticity in international trade settlement and dispute management (Moon 2015).
 Decline in multilateralism trade order: The main agenda of the WTO has been to
promote multilateralism trade order at the international level. However, the 2017 Trade
Policy Agenda of the United States of America has been focused on bilateral trade
system. In this way, influence of the largest economy of the world may increase further
opportunities in bilateral trade system as other WTO members may show their interest in
bilateral trade agreements.
 Possible Trade War situation for the US: The current trade policy led by Donald
Trump may force the US to face a possible trade war scenario as US exports may to deal
with export tariffs imposed during the bilateral trade settlement with the countries such as
China and Mexico. In this particular scenario, the GDP of the US may see a slow growth
till 2026 as shown in the underlying figure.

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Figure: Projected US GDP under the Latest Trade Policy Agreement
Source: (Hufbauer and Jung 2016)
 Restricting the expansion of global trade: Markedly, over the previous two decades,
the WTO has largely contributed towards the expansion of global trade involving the
developing countries within the multilateralism trade agreements (Destler 2016).
However, the latest crisis scenario led by the US Trade Policy may restrict the expansion
of global trade.
SOLUTION TO THE PROBLEM
On the basis of the above analysis, it can be seen that the new crisis in the World Trade
Organisation may lead to several negative impacts over the international trade balance and

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economic stability of various member countries of the WTO. Additionally, the policy of the US
government may lead to several issues for the developing countries who are the member of the
WTO. Hence, the international governing body needs to develop new policies to mitigate the
crisis situation and promote free trade and cooperation among the various major economies of
the world. Firstly, the WTO must focus on negotiating the international trade policies with the
US government in order to meet their demands and make necessary changes in the Trade
Facilitation Agreement to minimise the opposition of the United States (Oatley 2016). Secondly,
the World Trade Organisation may use a discriminating policy by asking its members to boycott
any sort of international trade with United States (Panagariya and Duttagupta 2012). The second
step will lead to economic losses for the nation as it will not get any access to developing
markets in the countries that are the member of the WTO (Oatley 2016). Therefore, the US
government will be forced to make changes in the 2017 Trade Policy and follow all rules and
regulation of the WTO.
CONCLUSION
By considering the above analysis, it can be seen that the WTO is an international
intergovernmental organisation that is responsible for regulating the trade among several
economies of the world. Currently, the 2017 Trade Policy of the US government has emerged as
a major factor leading to a crisis situation for the World Trade Organisation. The disrespect of
the US government towards the rules and regulations of the WTO would encourage other major
economies to work as independent market and lead to a chaos in the global economy.
Furthermore, the policy of the US government would negatively impact the free trading strategy
of the WTO and further lead to financial crisis in various developing nations of the world. The
current crisis of the WTO may restrict expansion of global trade and lead to a trade war situation

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in the US economy. Hence, it is important for the WTO to take necessary steps in order to
enforce the US government to make changes in its current trade policy. Conclusively, the crisis
situation must be dealt with proper negotiation process and strict policy measures in order to
mitigate the issue and benefit the entire global economy.

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