International Business: Understanding the Role and Challenges of World Trade Organization

This report provides an analysis of the formation and functions of the World Trade Organization (WTO) in international business. It examines the suitability of WTO and the challenges faced by the organization in encouraging trade between countries. The report also explores the impact of WTO policies on organizations and industries, and provides recommendations for promoting global trade effectively and efficiently.

International Business

EXECUTIVE SUMMARY
The report has been prepared on the topic International Business through which it has
been analysed that the formation of World Trade Organization has been demonstrated for
understanding its importance and meaning. Key functions of WTO has been elaborated by
determining its roles and important aspects of how they function in trading system. Suitability of
WTO has been assessed along with challenges faced by organization in achieving its aim of
encouraging trade between countries. Effectiveness of WTO has been aided in how specific
organizations and industries are affected by WTO policies. And finally, analysis of World Trade
Organization has been explained in promoting global trade effectively and efficiently on basis
that it does not hamper peace between countries. Therefore, global trade in international business
has been elaborated for the perspective of how the trade practices have been done. Thus, it has
been recommended that WTO should consider different economic and social factors which will
help in overall development and growth of countries. It has also been recommended that
employment opportunities should be encouraged more to provide more job opportunities to
people. Also, it is recommended that WTO policies should be framed properly and appropriately
for analysing other factors of trading.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
MAIN BODY...................................................................................................................................4
Recommendations .....................................................................................................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

MAIN BODY
Literature Review -
Theme 1 — Understanding motivation behind formation of World Trade Organization
(WTO)
According to point of view of author (Chemutai and Escaith., 2017 ), World Trade
Organization (WTO) is the only global organization dealing with rules of trade between nations.
It is a forum for government to negotiate trade agreements. The systems purpose is to help trade
flow to ensure producers of goods and services, exporters and importers conduct their business
free handedly. Consumers and producers follow the path of equally benefiting each other by
continuous flow of business at both ends. This also enables the business to run smoothly and
efficiently. At the heart of the system, world trading economies are ratified in their respective
parliaments. WTO provides agreements which are transparent and stable towards dealing with
business between producers of goods and consumers acquiring those services.
As specified by author (Goldstein., 2017), WTO also engages Government to keep the
trade policies and procedures transparent. Monitoring and implementation of trade policies also
function for the trade which increases trade internationally. WTO also provides legal and
institutional framework which helps in benefiting and coordinating with the rules and regulations
to be followed for trade effectively and efficiently. Also, WTO balances trade between different
countries so that the countries are benefited from these. Therefore, World Trade Organization
helps the countries to benefit each other on exponential basis.
As per authors view (Hoekman and Mavroidis., 2020), WTO is still unfavourable
towards developing countries. Free trade prevents developing economies develop infant
industries. WTO trade deals form difficulties in its formation which distracts and deteriorates the
progress of business. This results in WTO trade deals having difficulty to form consensus. As
WTO has implemented strong defence of TRIP Trade Related Property Rights, which allows the
firms and companies to implement patents and copyrights on stricter basis. World Trade
Organization is fundamentally undemocratic because it impacts all aspects of society and
economy on large forms. Human rights are being tramples which affects the regulations and

rules being framed in favour of Human Rights. Environment is also being affected and destroyed
by World Trade Organization. WTO attempts to deregulate industries which have been
flourishing in fishing, water utilities, energy generation and further exploits natural resources.
The TRIP's and trademarks comes at the expense of human health and lives of general people.
Due to free and international trade patterns WTO has made difficult the trade because
international trading dominates the other trades which have been ongoing with different
countries. These factors become negative aspects for WTO which leads to the points going
against it. Therefore, this has been the negative aspect to which the World Trade Organization
has been working against challenging environment.
Theme 2 — Key functions of WTO
As specified by author (Hoekman., 2020), WTO implements rules and provisions which
are related to trade policy and also reviews new mechanisms. World Trade Organization provide
facilities for administration, operation and implementation of bilateral and multilateral
agreements of world trade. Future strategies are also decided by member countries which
constitutes decisions related to trade and tariff. WTO ensures optimum uses of world resources.
World Trade Organization administers processes and rules which are related to disputes between
countries if they happen. Future strategies are being discussed by World Trade Organization.
Monitoring of national trade policies is being done by World Trade Organizations.
According to author (Hoekman, Bluth and Esche., 2018), Technical assistance and
training of members is incorporated by World Trade Organization which is done for developing
countries. Along with this, different trade policies are reviewed which enable the process and
functions of WTO effectively and efficiently. Forum for member countries which are made for
WTO form future strategies which help in balancing economies of scale. Therefore, these are
functions of WTO which ensures smooth and healthy functioning of all aspects demonstrate all
important sectors. WTO handles trade disputes which emerges between the countries who are
trading in businesses of exporting and importing products. Thus, WTO on large trading scale
maintains cordial relations which helps the countries know their trade patterns and exporting and
importing of services becomes easier.
As per directed by author (Hoekman., 2018), there are various challenges and issues
faced by WTO which define the dis-functioning of WTO. Due to nature of China's economic

system, the size and growth of its economy has created tensions in global trading system. In
WTO negotiations, there is no specific definition about what is constituted in developed and
developing countries. WTO rules have not kept pace with the e-commerce and digital trading
patterns. Due to changing international economic environment series of significant challenges
are created for WTO. Difficulties arise when there are various rules and regulation of countries
who are engaged in the trade continuously hammer the growth and development aspect. There
are many issues which arise between countries while trading in products and services. Policies
and regulations becomes difficult to follow in trade which creates problem in importing and
exporting of products. Challenges have been faced in negotiating with countries in trade. Cold
war arises between countries which involve in trading business for accepting services and
products of countries in trade. Due to unfair trading systems, there arises political instability
which demoralizes the economic scale and degrades the value of other economies framed.
Political instability is the major challenge faced by WTO during the trade. Parties standing in
politics have to change their policies, rules and regulations.
Theme 3 — Suitability of WTO and challenges of organization in encouraging trade
between countries
According to author (Mitchell., 2017), advancement in technology has paved the way for
WTO to work more effectively and efficiently. Chances have been increased that technology
advancements has increased the way in which WTO is functioning. Since technology is
improving day by day, there are innovative ways in which WTO has also changed its patterns of
work. Advancement in technology factor is seen in trading systems which makes easier
importing and exporting of products. The information that is processed flows in a planned
manner. The future aspect of growth and development is seen by variations which will improve
the patterns and systems of trading. It is very essential that WTO follows the trading policies
appropriately so that it becomes easier for the countries to imbibe those policies effectively in
their practice.
As per author (Mohapatra and Mishra., 2020), The outbreak of covid — 19 pandemic has
demanded an urgent need to examine principles and values of WTO to adopt changing patterns.
There are different measures been taken to recover in tariff reductions. Systematic reform
involves in knowing what is there in the current system which helps organization develop their

plans for future needs and wants which are being considered important. As WTO members are
fully committed to multilateralism, therefore the future of WTO is progressively exceeding
towards maintaining cordial relations between different countries in trade.
As specified by author (O'Dowd., 2018), challenges faced by organization in achieving
the aim of encouraging trade between countries is faced by food beverage and tabacoo industries
along with posting regulations. WTO engages in formal disputes which becomes major
challenge. Governments raise trade challenges at the WTO TBT committee that leads to change
in policy. WTO rules in trade challenge influence policy which are framed. Different countries
contribute in making trade possible because of the finances which they hold. Their has been a
significant role of economies of different countries which have been a major aspect for
organization. World Trade Organization faces challenges in bringing countries together to
navigate the trading of products and services which have been important source for exporting
and importing. Organizations face difficulties in encouraging trade between countries.
According to author (Parikesit and Wairocana., 2017), International trading patterns have
changed ways through which some countries are not capable enough to progress in the current
pandemic situation. Therefore, organizations face challenges which while they encourage and
motivate the countries to trade with exporting and importing process. Social and economic
factors play major role in making the trade possible between the countries. Supply chains are
also affected by diversifications which takes place among foreign suppliers. This happens when
international trading patterns hinder the practices followed by WTO and demotivate the
efficiency and effectiveness.
Theme 4 — Organization or industries affected by WTO policies
As per author (Parizek., 2019), Organization and industries are greatly affected by WTO
policies which also influences the process and regulations of those organizations as well. Also,
due to government interruption organizations and industries vary in their policies. Due to politics
in organizations, there has been a major drawback for the industries or organizations to grow.
Various industries lack development due to external business environment hindrance which
largely manipulates the systems of those organizations. Some examples in which organizations
are affected by WTO policies are explained as -

International Monetary Fund (IMF) helps organization and industries to ensure stability
and of international monetary and financial system. Organizations and industries need strong
financial basis for trading between countries. WTO and IMF both work together to improve
ability to trade between countries which consists of exporting and importing of products and
services. Supply side constraints to trade are tackled by global trading system which supports
Least Developed Countries (LDC). Technical trading and assistance is provided by WTO and
IMF. This helps the countries to trade beneficially and exponentially in terms of growth. By
following trade policies, high level coordination is achieved by the organizations and industries
which reflect trade patterns for the products and services. This also increases business of those
industries and organizations. Trade liberalization is also achieved by following different WTO
trade policies. IMF also ensures that the organizations and industries are financially stable
enough so that they can prosper and increase their business standards on the terms that they are
able to identify the loopholes and aspects of trading in different countries. Organizations which
follow WTO policies are observed under regular consultation by IMF. WTO's special policies
consist of assessing, developing and transition economies, transparency in the information
transferred, organizations and industries are informed about these special policies for their
betterment and fair trade practices.
According to author (Sampson., 2018), WTO promotes global trade through which the
trading throughout the world has increased. This also has enhanced the new ways in which
trading can be done successfully. Technology in this aspect has helped WTO to improve the
ways in which the trading is done. Technology on various aspects has helped to enhance and
diversify the ways of importing and exporting of products and make avail the services to the
customers. Different organizations provide trading opportunities to other developed countries
which inculcates to form new ways in which the work is done. There are various rules of global
trade which serves the following purpose such as -
Discourage domestic laws and taxes that are classified as protection and reduce quotas
and subsidies, the Global trade policies ease customs procedures along with rein in anti —
import tariffs. WTO helps in stimulating employment and economic growth along with
increasing the global trade practices. Also, higher standards of living are measured along with
providing sustainable development. WTO enhances trading between countries by settling

disputes and trade tensions so that efficient trade can process with the flow while conducting
business.
According to author (Sharifi Tarazkoohi and Fateminejad., 2017), WTO supports
environment and health of citizens to help countries to develop. Also, while trading globally,
WTO contributes to peace and stability. As government involvement is also there, therefore
WTO ensures that it helps in reflecting good governance to the people of country. WTO benefits
organizations by promoting transparent policies of government and helps in binding those
policies for organizations which are in trading systems. Political factors also aids in growth for
increasing global trade. This ensures that there are practices which are being followed for the
purpose that the countries which are trading partners enhance their services towards the other
countries. For more economic world benefits to achieve, the economies of scale are balanced in
such a way that they help in development of overall structure of world. Balance is maintained
between countries while they trade between countries. Global trade is effective in ways that it
helps to communicate with different countries and their practices are adopted to adopt on larger
scale while their trading benefits the countries in availing their services. Global trading systems
also helps to trade industries and organizations to evolve more on the scale that preferences are
given to them for their products which countries produce. WTO also contribute in availing many
opportunities for to countries in trade business.
According to Author (Talus, Wüstenberg and Ripple., 2018), there are negative aspects
and threats top global trading patters which are increasing day by day. These threats may arise
due to changes in the policies of WTO which directly affects the organizations and industries
that are trading with different countries. International trading becomes difficult in ways that rules
and regulation followed and framed in countries are different in perspective of trade which
makes it hard for the importers and exporters to follow those rules and regulations.
According to Author (), WTO also breaks barriers which are between the countries or
between people of different economies. In this, economic and social factors play major role.
Global trade faces difficulties with the external business environment due to competition
between companies of same industries or organizations. This becomes weakness aspect for those
organizations and industries which face competition. Also, this initiates the threat aspects with
those entities as whole. On the other hand, WTO also fails to reduce tariffs on agriculture. Free
trading in this phase ignores cultural factors. WTO is also criticized for being undemocratic.

Explaining about the growth and d3evelopment from World Trade Organization, it progresses
with slow growth. WTO becomes overshadowed by TIPP agreements which fall outside the
purvey of WTO rules.
As per author (Parizek., 2019), tariff peaks hamper developing countries exports and their
attempts in export diversification. The domestic economy supporters face neglect because of
global competitive better goods. Rules uniformly applied on WTO members have brought
inequalities because of varied economic conditions of the countries. WTO is dominated by
leading industrialized countries which devalues the opportunities for develop countries.
Therefore, these disadvantages and negative effects of WTO makes the trading patterns and
systems difficult. But as there are positive factors and advantages which benefits countries, there
are criticisms which are faced by countries while trading in business and other developmental
aspects. Thus, global trading is both beneficial and negatively impacts trading while exporting of
products and services between countries. These points are specified on the terms that they are
likely to provide exponential growth and development to the countries which follow free trade
policies.
As specified by author (Talus, Wüstenberg and Ripple., 2018), Global trade is the basis
on which trading between countries is encouraged and promoted so that businesses achieve
strong relationships between countries and are benefited by their business patterns and strengths
of the countries benefits in the overall economies of scale. The financial aspect becomes strong
as they get help from the strong financial base countries. World Trade Organization avails the
other countries to follow the path of progress and provide products and services by forming big
industry and organizations. Therefore, global trading has been a big challenge and helping hand
to organizations and industries in enhancing their business perspective in various forms through
which they promote their businesses and evaluate their performances on different levels.
As per author (Sampson., 2018), There are various standards and rules which are
followed by WTO which makes sure that they are followed and are under proper regulations and
act. There are different ways in Whicham WTO provides financial aids to the businesses for
growth and enhancement in their overall structure. This not only helps them to recover from their
loopholes which they carry but also helps in analysing their economic status and position among
different other countries. Comparatively, this analysis on both the sides of trade helps in knowing
the true knowledge about the trading on large. Along with this, progress is only measured by the

country's economic and social factors which makes them avail the opportunities for business to
grow significantly, effectively and efficiently.
Recommendations
 Encourage more LDC's to communicate their needs and wants. Along with this,
strengthen the process of need communication.
 More efficient mechanism should be followed for demand and supply mechanisms.
 Usable information should be shared by accurate database which helps in evolvement of
the process more accurately and quickly.
 WTO members should be included in process of decision-making.
 More employment opportunities should be provided to people.
 Political and economic factors should be considered as important and should be analysed
before any prior decision-making.
 WTO policies should be framed properly on basis that it aids in evaluating the overall
economy of scale.
CONCLUSION
Thus, it is concluded from above report that formation of World Trade Organization was
demonstrated for understanding its importance and meaning. Key functions of WTO were
elaborated determining its roles and important aspects of how they function for trading system.
Suitability of WTO was assessed along with challenges faced by organization in achieving its
aim of encouraging trade between countries. Effectiveness of WTO was assessed of how specific
organizations and industries are affected by WTO policies. And finally, analysis of World Trade
Organization was explained in promoting global trade effectively and efficiently on basis that it
does not hamper peace.

REFERENCES
Books and Journals
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