Crisis Faced by World Trade Organization: Economic Interpretations and Implications of Economic Cooperation

Running head: INTERNATIONAL POLITICAL ECONOMY
International Political Economy
Name of the Student
Name of the University
Author Note

1INTERNATIONAL POLITICAL ECONOMY
Introduction
The global trade and commercial scenario has developed significantly over the last
few decades and has undergone considerable changes and dynamics. Much of this
development of the global trade scenario can be attributed to the international phenomena
like that of Globalization, industrial liberalisation as well as liberalisations of the trade sectors
of different countries across the globe in different periods of time (Beck 2018). The
governments of the countries have also played crucial roles in contributing to the dynamics of
the trade sectors across the globe, which in turn has huge implications on the global
economy.
With the international economy becoming more integrated, inclusive and highly
interconnected and with more businesses going global, the advantages of trade and commerce
can be seen to be observed by the economies across the globe, especially in terms of
increased expansion of businesses and productivity of the domestic producers, contributing to
increased economic growth of the economies as well as in terms of increased options of
goods and services for the consumers and inflow of technologies and infrastructures in the
countries (Hirst, Thompson and Bromley 2015). Over the years, the government of different
countries as well as several international organizations have worked in facilitating this global
trade dynamics, of which one of the primary international body is that of the World Trade
Organization.
However, in spite of its immense significance and contribution in the history of global
trading scenario, in the recent period, the World Trade Organization has been facing several
critical issues which have been challenging the existence and purpose of the institution (Muro
2014). Keeping this into consideration, the concerned assignment tries to discuss about the
crisis faced by the World Trade Organization and the principle reasons behind the same,

2INTERNATIONAL POLITICAL ECONOMY
thereby discussing the economic interpretations and implications of economic cooperation,
the causes behind the same and the problems encountered in terms of economic cooperation
in the recent years.
World Trade Organization
The World Trade Organization, commencing on January 1st, 1995, is one of the
primary international organization which had been formed with the primary objective of
regulating and facilitating international trade and the increasing dynamics and activities in
this domain. This institution was formed by mutual agreement of 124 nations, replacing the
General Agreement on Tariffs and Trade (GATT) (Narlikar et al. 2012).
The WTO was primarily formed with the objectives of regulating the trade of goods
and services between the different trading nations across the globe and also for monitoring
the intellectual property of the trade participating countries. The WTO provides the
framework for negotiation of the trade agreements and resolution of disputes for the purpose
of enhancing the adherence of the participating nations to the agreements of the WTO
(Margulis 2014).
Functions of the WTO
The primary functions of this international trade regulating organization include that
of monitoring the implementation, operation and administration of the trade and commercial
agreements between the various member nations of the organization (Stoler 2014). The
institution also facilitates negotiations between the trading countries for solving any kind of
disputes regarding trade and transactions and administers the Mechanism of Trade Policy
Review. Apart from these, the WTO also Cooperates with other international institutions like
that of the International Monetary Fund, International Bank for Reconstruction and
Development and others for the purpose of achieving a more inclusive framework for global

3INTERNATIONAL POLITICAL ECONOMY
economic policy-making and growth of the trade and commerce related activities (Vidigal
2013).
Principles of the WTO
The World Trade Organization primarily designs its trade policy framework based on the
principles of:
Non-Discrimination- According to this principle, the WTO needs to keep an unbiased attitude
for implementation of policies and provision of facilities and favours to all the member
nation, without any special emphasis on any particular country, except for instances related to
environmental protection and other issues of concern (Davey 2014).
Transparency- The WTO and the member countries need to publish their trade regulations in
order to keep transparency among their member partners and of the trading activities, tariff
rates, quota and other aspects.
Binding commitments- The tariff commitments imposed by the members of the WTO in
multilateral agreements are usually binding and are changes only after negotiations with the
other trading partners (Davis 2012).
Apart from the above principles, the WTO also operates in a framework with the
principles of reciprocity, safety values like that of restriction of trade voluntarily by the
member countries for protection of environment, public health and social welfare purposes.
Thus, from the above discussion, it becomes evident that the World Trade
Organization has been playing crucial roles in the international trade dynamics by regulating,
monitoring and facilitating global exchange of goods, services, technologies and intellectual
properties and by solving any disputes or discrepancies arising out of the same (Wilkinson
2013). However, in spite of being one of the primary regulators of international trade, the