Impact of World Trade Organisation on Global Trade

This article discusses the emergence and impact of the World Trade Organisation (WTO) on global trade. It explores the role of WTO in reducing trade barriers, supporting importers, exporters, and producers of goods. The article covers topics such as protectionism, trade liberalization, tariff and non-tariff barriers, WTO agreements, benefits and challenges, and the future of WTO. It also mentions the Brexit issue and its possible consequences based on WTO agreements.

P a g e | 1
Bachelor of Business in Supply Chain & Transport Management
(FT & ACCS) – Award (NFQ Level 7) Academic Year -2018-2019
MGMT7050 Global Trade & Customs Law 17972
What is the World Trade Organisation (WTO) and what impact does
it have on world trade?
Module Lecturer: Gerry Greenway
Student: Karol Makarewicz

P a g e | 2
Table of Content
Cover Page……………………………….………………..(1)
Table of Content……………………….…………………(2)
Introduction………………………………………………..(3)
Protectionism and Trade Liberalization……...........(3-4)
Tariff and Non-Tariff barriers……………………..……(4)
WTO Agreements……………………………………..….(5)
Benefits and challenges…………………………..…….(6)
Conclusion…………………………………………..…….(7)
Bibliography………………………………………...…..(8-9)

P a g e | 3
Introduction
WTO currently have 168 members representing 98% of the whole world established
in 1995 by Uruguay round negotiations (1986-94). The World Trade Organization is
an international organization containing forums between governments for negotiation
of trade agreements. WTO is aiming to reduce trade barriers and also the
organization is supporting customers and protect spreading of diseases. WTO is
about to support importers and exporters and support producers of goods in nations.
The main purpose of WTO is to obtain the lowest possible barriers (wto.org 2019).
WTO is run by its member governments and the most important decisions are made
by the body as a whole via attendance of meetings in Geneva 1-2 times a year. Main
points of WTO are to be more open, more completive, protecting the environment,
more benefits for less developed countries, predictable and transparent and Non-
discrimination system. In this report I will be mainly discussing about WTO
emergence, impact on its members and future. Also, I will analyse protectionism and
trade liberalization the barriers and tariffs agreements benefit and challenges which
organization is facing and will mention the Brexit issue and possible consequences
based on WTO agreement and on the end of this assignment I will have my
conclusion on all material.
Discussion:
Protectionism and Trade Liberalization
Protectionism on the market is about to protecting own industries, own markets from
outside countries by raising tax or implementing charges against other countries to
make products more expensive and less competitive compered to local products
Also, there are quotas to reduce the volume of goods to enter market or
standardization which might build entry barrier for other markets where standards
are different. Accorded to the Corporate Finance Institute. (2019). Protectionism has
advantages and disadvantages like reducing imports to balance trade and to give a
boost to the local and national market which can also increase job vacancies and
finally increase the national GDP. Protectionism might also have a negative effect on
cultural exchange, innovation, price increase and quality of services and not always
can influence positive economy as expected, where in 1929 protectionism had
catastrophic impact on US economy (Smoot-Hawley Tariff Act 1930) causing
significant decrease in trade on global market and increasing the great depression in
United States. The WTO is aiming to reduce barriers and to improve products flow
according to Roberto Azevedo WTO CEO, Protectionism have bad influence for
global trade warning Donald Trump President of the United States as Donald Trump
is seen as a protectionism influencer.
Trade Liberalization is simply the opposite way as compared to liberalization and is
aiming to reduce trade barriers, quotas and increase competition in markets to

P a g e | 4
decrease prices of products for the overall benefit of customers. Also, its beneficial
for developing countries as it also brings product differentiation and reduced barriers
are attracting multinational companies to invest money due to lower labor cost.
Stated to (Hummel’s and Skiba, 2004), international trade is generating higher
product quality also argued to Trade.ec.europa.eu. (2019). EU, thanks to the
ambitious effect of all negotiations since Uruguay round household in EU saves
around 60 billion euro per year. WTO is creating great opportunity and growth with
increasing global wealth. Interesting is the fact that due to less pro free globalization
directions are causing some countries to step back from the route which normally
they were aiming to like the UK and effect of Brexit where United Kingdom could lose
benefits in agreements with trade partners and could take years to renegotiate new
deals additionally that could have bad impact on British export were stated by Centre
for Economic Performance (CEP), UK export could decrease by 40% in a period of
10 years also slower GDP growth and less amount of investments. As well, Brexit
would have negative impact on Ireland and product prices were stated by Dr. Seán
Ó'Riordáin Ireland is most exposed representing 23% of total goods imported and all
those products will have higher price due to duty.
Tariff and Non-Tariff barriers
Trade between countries increased rapidly mainly due to reducing eliminating or
decreasing tariffs globally between countries were stated by Ahn, J., Dabla-Norris,
E., Duval, R., Hu, B. and Njie, L. (2016). Removing barriers could increase
productivity on international market especially when some countries are affected by
stagnation and growth issues. WTO is highly committed to reducing tariffs and
support trade between members. Tarif rates are dependent on agreements between
countries and regions however stated by WTO some of the barriers are set to ensure
that some standards are set or non-discrimination rules are supporting procedures,
especially technical barriers to trade (TBT) Agreement Also, ensuring that quality of
food is safe for human consumption and WTO established SPS measures to make
sure that trade partners are aligning with standards for safe products. Tariffs are set
mainly to support local producers from against outside competition also supporting
markets with transparency and to control and predict trading. The main reason for
non-tariff system is to enter other markets, example of that is (GATT) agreement
signed by 23 countries in 1948 also EEC European Economic Community created in
1957 to reduce trade barriers between its members and to improve duty-free trade.
Accorded to Martin Howe QC if Great Britain will leave European Union with no deal
it could increase food prices by 12% and some products like beef even by 44%. Its
also is causing issues even if EU would like to have reduced tariffs to trade with UK
would cause discrimination with rest of the world. European union is recognized as a
one body where within members, trade is flowing without barriers. Common Customs
Tariff' (CCT) are applied to goods on imports from outside of EU and depending from
product classification. Dangerous thinking of Donald Trump in my opinion and stated
by Jake Mcc Gwire where Donald Trump is aiming to protectionism by withdrawal
from Trans Pacific Partnership or increasing tariffs for Chinese and increasing
conflict on the line USA -China.

P a g e | 5
WTO Agreements
There is multiple of agreements and I would like to focus on five main ones to
discuss their purpose and reason. Agreements are approvals by other person or
groups for accepting something under some rules.
1) Agreement on Agriculture
2) Agreement on trade in textile and Clothing
3) Agreement on TRIM’s
4) Agreement on TRIP’s
5) General Agreement on trade in services GAT’s
Agreement on Agriculture (AoA) was negotiated and agreed during Uruguay round of
negotiations and introduced into life in 1995 following agreements that was reached.
Establishing fair market trade reform with reducing trade barriers and by bringing
transparency for charges, protection against unfair trading and promoting
development of all countries. Agreement in textile and clothing was also signed
during the Uruguay round where all parties agreed MFA Multi-Fiber Agreement of
norms and rules allowing for more liberalization but argued to Gerard Considine and
Alan Matthews 1992 MFA liberalization would hit Irish textile business by job loses
and increase competition on market. Agreements on TRIM’s Trade-Related
Investment Measures that’s another agreement negotiated during Uruguay round
and that’s agreement which protect against discrimination practices where
investment might be used to disturb trade. Another one is TRIP’s another trade
associated agreement of Intellectual property rights with body council TRIPS by
monitoring how other members are applying. Finally, GAT’s is a WTO treaty, which
is a General Agreement on Trade in Services, was created to extend multifaceted
trading system to service sector with goal to remove or limit trade barriers somehow
accorded to World Development Movement Report GATS are not under obligations
for countries to enter such agreement.

P a g e | 6
Benefits and challenges
WTO is facing challenges but also brings benefits to international Trade one of them
is multinational trade system and policies implemented to protect traders and to
support developing countries to access multinational markets stated by Peter
Gallagher, Patrick Low, Andrew L. Stoler Cambodia may use WTO as an
international force for negotiation. Its also can bring international investment and
improve productivity, and it also protects this country against implementing high
tariffs by other countries. Argued by Shang-Jin Wei and Arvind Subramanian WTO
helped increase trade by 120% and have positive impact but mostly is dependent on
proactive engagement with members. Argued by Andrew K. Rose and his
examination suggests that WTO have not had dramatic impact on trading
WTO is facing challenges and some of the biggest countries don’t believe that WTO
can handle problems in which US government have confidence in that accusing
China and other members of WTO for breaking trading rules. The United states
launched disputes against few members for imposing unfair tariffs in the response of
Donald Trump aluminum trade limitation with EU believing that they are protecting
national security interest.
Accorded to Arie Reich disputes of 22.1% were unable to solve issues brought to the
attention and year by year this problem is increasing and also lack of authority is
often causing lack of decision to resolve the problem.
Developing countries are complaining that they have no benefits from the new rules
often with lack of proper agencies, resources, fear of political punishments to protect
causing to question if they should not have more benefits to have, they own regional
agreements and trading with other developing countries. Stated by Robert E.
Baldwin WTO need some fixing of old systems but not need to announce that WTO
isn’t beneficial for trade. According to WTO one of the main benefits is that they can
contribute to peace and stability they are arguing that multilateral system solving
conflicts is one of the most contributing assets.

P a g e | 7
Conclusion
WTO is kind of new organization aiming to bring stability and balanced control of
agreed agendas between nations where emergence is main structure of this
organization. Since World War II there was need for this kind of organization to
control and involve countries for negotiations to improve trade and resolve disputes.
WTO is helping to reduce protectionism which have dangerous possible
consequences caused more harm in The Great Depression in USA in 1929’s.
Today’s world needs to have such an organization to be benefiting world trade.
Thanks to WTO there were multiple agreements negotiated which resulted in
prevention of unfair practices or were beneficial for foods safety procedures ending
on intellectual protection agreements argued by some that non-tariffs barriers
achieved by WTO resulted in productivity and trade increase. In my opinion WTO
has an impact on the trading world and is supporting balanced influence on all
members. Brexit might bring more uncertainly not only onto themselves but also into
the trading system creating new challenges. I believe that WTO might need to be in
position to reform some of the systems to become more proactive and supportive in
case of turbulences caused by country not respecting agreements. Developing
countries are expecting WTO to be protecting not only richest but to treat all
members equal and to be more responsive to disputes.

P a g e | 8
Bibliography
Corporate Finance Institute. (2019). Protectionism - Definition, Types, Advantages and
Disadvantages. [online] Available at:
https://corporatefinanceinstitute.com/resources/knowledge/economics/protectionism/ [Accessed 22
Mar. 2019].
The Balance. (2019). Those Who Don't Learn From Smoot-Hawley Are Doomed to Repeat It. [online]
Available at: https://www.thebalance.com/smoot-hawley-tariff-lessons-today-4136667 [Accessed 22
Mar. 2019].
Economicshelp.org. (2019). [online] Available at: https://www.economicshelp.org/blog/glossary/trade-
liberalisation/ [Accessed 22 Mar. 2019].
Trade.ec.europa.eu. (2019). [online] Available at:
http://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156619.pdf [Accessed 22 Mar. 2019].
(CEP), C. (2019). Centre for Economic Performance (CEP) - Economic and Social Research Council.
[online] Esrc.ukri.org. Available at: https://esrc.ukri.org/research/our-research/centre-for-economic-
performance-cep/ [Accessed 22 Mar. 2019].
Ó'Riordáin, S. (2019). [online] Seanoriordain.ie. Available at:
http://seanoriordain.ie/wp-content/uploads/2018/04/Brexit-Irish-import-exposure.pdf [Accessed 22
Mar. 2019].
Ahn, J., Dabla-Norris, E., Duval, R., Hu, B. and Njie, L. (2016). Reassessing the Productivity Gains
from Trade Liberalization. IMF Working Papers, 16(77), p.1.
Considine, G. (1995). The implications of liberalising the multi-fibre arrangement (MFA) for the Irish
textile and clothing industries.
Taxation and Customs Union - European Commission. (2019). TARIC - Taxation and
Customs Union - European Commission. [online] Available at:
https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-
common-customs-tariff/taric_en [Accessed 25 Mar. 2019].
Gallagher, P., Low, P. and Stoler, A. (2005). Managing the Challenges of WTO Participation.
Leiden: Cambridge University Press.
Subramanian, A. and Wei, S. (2019). The WTO promotes trade, strongly but unevenly.

P a g e | 9
Rose, A. (2019). [online] Faculty.haas.berkeley.edu. Available at:
http://faculty.haas.berkeley.edu/arose/GATT.pdf [Accessed 25 Mar. 2019].
Baldwin, R. (2019). [online] Karyiuwong.com. Available at:
https://pdfs.semanticscholar.org/2bba/f3aae047a565e22b24a5de2573c84a3b25e1.pdf
[Accessed 14 May 2002].
MccGwire, J. (2019). Jake MccGwire - A Game Theory Analysis of Donald Trumps
Proposed Tariff on Chinese Exports | doksi.net. [online]
https://www.tcd.ie/Economics/assets/pdf/SER/2017/9trump.pdf. Available at:
https://doksi.net/get.php?lid=27359 [Accessed 25 Mar. 2019].
Ustr.gov. (2019). United States Challenges Five WTO Members Imposing Illegal Tariffs
Against U.S. Products. [online] Available at: https://ustr.gov/about-us/policy-offices/press-
office/press-releases/2018/july/united-states-challenges-five-wto [Accessed 26 Mar. 2019].
Reich, A. (2019). The Effectiveness of the WTO Dispute Settlement System: A Statistical
Analysis.
Shaffer, G. (2019). The Challenges of WTO Law: Strategies for Developing Country
Adaptation. [online] Papers.ssrn.com. Available at: https://papers.ssrn.com/sol3/papers.cfm?
abstract_id=873938 [Accessed 26 Mar. 2019].