Level 5 International Business: WTO Executive Summary Analysis

This report provides an executive summary of the World Trade Organization (WTO), examining its role in regulating international trade practices and promoting economic stability. It delves into the motives behind the WTO's formation, its various functions, and the challenges it faces, such as transparency and agricultural agreements. The report explores how different theories are applied to enhance the WTO's effectiveness, focusing on dispute settlement systems and trade relations. It analyzes the importance of fair trade policies for global development, highlighting the WTO's hierarchical structure and its impact on underdeveloped and developing nations. The report also discusses the suitability of the WTO in encouraging trade between countries, along with the challenges it faces, including a lack of transparency and issues related to e-commerce. Overall, the report provides a comprehensive overview of the WTO's significance in the global economy and the complexities of international trade.

INTERNATIONAL
BUSINESS

EXECUTIVE SUMMARY
This report contains various types of function that are related to the World trade
organisation. This report discuses about things that are motivating the WTO to work more and
more effectively. The formation of WTO happened so that all the trade practices that are being
used can be regulated. They are the one that will be maintaining peaceful trade relation in
between the countries and they will be the one who will be solving various types of dispute. The
report will also discuss about the views of various different author in relation to the international
trade that is being conducted by the WTO. There are various different types of function that are
related to the working of the WTO, as they are the one that will be managing the fund
requirement and the allotment of the funds to various different countries and they are also
responsible to formulation of the policy regard to the trade. This report will also throw some
light on the challenges and the issues faced by the WTO and what all theory are they using so as
to formulate policy.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
Literature review.............................................................................................................................4
Determining motives behind formation of World Trade Organisation (WTO).....................4
Functions of World Trade Organisation ...............................................................................5
Suitability and challenges faced by World Trade Organisation for encouraging trade between
countries.................................................................................................................................6
Applying various Theories for effectiveness of WTO...........................................................7
Analysis and discussion..................................................................................................................8
CONCLUSION.............................................................................................................................10
REFERENCES..............................................................................................................................12
APPENDIX...................................................................................................................................15

INTRODUCTION
World trade organisation(WTO) is the global organisation dealing in augmenting trade
practices between nations. It makes trading rules and agreements between which supports fair
means of trade practices, exports, imports. It ensures smooth trade means and businesses to
promote peace and harmony. Decision-making power is been authorised to the hands of member
of government (Aagaard, Aagaard and Harrison, 2019). World Trade Organisation formulates
and implements principles of trading system. It follows a hierarchical structure for making
decisions, all crucial and major decisions are been formulated in Ministerial Conference which is
a general meeting held at after every two years. Currently members at World Trade Organisation
includes above 160 members from different nations. For government to intervene in World trade
Organisation, it has to implement economic policies by negotiating with World Trade
Organisation rules and policies. The annual budget at World Trade Organisation is been driven
by members of different nation. World Trade Organisation groups frames all policies and terms
with the consent of different nations to promote international trade. World Trade Organisation
frames at making regulation regarding trade relations between nation and promotes to settle
trade disputes. It focuses at implementing decisions which promotes national and international
security and environment friendly laws. It takes proper measures to consider fair trade practices
and eliminating trade discrimination between nations.
Literature review
Determining motives behind formation of World Trade Organisation (WTO)
As per the study of Daniel Gay is mentioned by him that WTO agreements manges and
controls trade relations between different nations. It formulates all trade agreements and rules
which supports in trade settling disputes. It makes trade policies by consideration to the global
economic policies of different nations (Duz Tan and Tas, 2020). It ensures that there is a
smooth and transparent flow of information to make sure that all the decisions are made which
promotes fair trade practices. It ensures equality and justice in conducting trade operations
between nations. World Trade Organisation provides cooperation and coordination to the under
developed or developing countries. It renders a framework of the polices and objectives of
operations of Trade Agreements between nations. World Trade Organisation cooperates and
coordinates with international monetary fund and other different international banks to manage

and control funding in implementing trade practices (Ansariyan, 2019). Members from different
nations takes consent with each other and keep their opinion for framing major trade decisions.
With the increase of globalisation, international trade practices has risen very important. To
resolve trade barriers of International trading systems,World Trade Organisation implements
trading policies to eliminate difference and trade barriers. It follows different principles to
implement trading policies, these principles are stated below:
 WTO implement different measures for conducting fair trade practices.
 It ensures transparent flow of information and practices.
 WTO promotes safety value like public and environmental safety
 It binds to the commitment made in the annual general meeting.
The main motive of World Trade Organisation involves protecting discrimination against
trade practices and promote economic welfare and prosperity between nations. It conduct
different functions with compliance to the governmental legislations to promote orderly trading
systems. government can also intervene in case of unfair and unjust trade practices by World
Trade Organisation. Policies and rules are framed to reflects the benefits of trading systems
among different nations.
Functions of World Trade Organisation
According to the views of Smriti Chanda in her article WTO supports by raising standard
of living by reducing the cost of living, it involves the expenses incurred for basic necessity or
luxury products all these are been termed by trade practices. World Trade Organisation reduces
the barriers of trade and formulates easy trade practices which further minimises cost of
manufacturing and production and cost of living (Beckerle, 2020). Reduced cost of living
increases the purchasing power of people in an economy and increases the standard of living of
people. Promoting agriculture trade practices results availability of cheaper food prices.
WTO supports in settling trade disputes and promotes international trading relationships.
Promoting international relations renders global economic stability. It renders establishment of
trade business which helps in economic development and welfare.
Foreign trading practices generates new opportunities and economic development. It
generates cash flow in the economy as more trade business positively impacts the economy. It
generates employment opportunities, technological advancement, helps in speedy flow of
economic growth.

WTO supports reduced cost of foreign business, it promotes fair international trade
practices, which maintain the global economic stability.
It promotes smooth governance, policies framed by World Trade Organisation helps to
maintain the balanced trade policies (Bromberg and et. al., 2017). It frames trade policies with
compliance of government rules and regulations. Government also intervenes in the case of
unfair trade practices and adjust rules and regulations in accordance of social and economic
welfare.
Other motives World Trade Organisation includes to reduce the negative impact of
government. It frames policies for harmony between trade relations of different nations.
It promotes environment and health benefits , it makes trade policies which helps in
protecting environment and human safety.
The major benefit of World Trade Organisation agreements supports underdeveloped and
developing countries. Coalitions helps developing countries to work together to achieve
economic development.
Suitability and challenges faced by World Trade Organisation for encouraging trade between
countries
In the opinion of Jeffrey j. Schott World Trade Organisation faces many challenges,
these are been discussed among the member of World Trade Organisation (Diaz-Rainey and
Tulloch., 2018). Challenges faced by World Trade Organisation impacts the global trading
system, some of these are been discussed below:
 Transparency: Members of World Trade Organisation can take special privileges by
designating them as developing countries.
 Agriculture agreements:World Trade Organisation trade practices involves restriction
agricultural practices, agricultural agreements causes food security and development
issues.
 Economic disputes: Market economic disputes negatively impacts World Trade
Organisation. Disputes between different nations causes violation of trade policies. It
causes economic disparities due which affects global economic development.
 Negative impact on trading practices leads to high taxes charges, and hight cost of
production which further increases the living cost of people
Suitability under World Trade Organisation practices includes:

World Trade Organisation trade practices helps in promoting fair means of trading among
different nations. It generates new opportunities to both developed and underdeveloped
countries. It follows all the trade policies in accordance to legal policies and government
legislations. it helps it building trade relation in foreign market. It helps to reduce excise duty
and tariffs which helps to promote international trade practices (Duz Tan and Tas., 2020). It
reduces the cost of production and increases the standard of living of people.
While the World trade organisation wants to encourage good trade relation between
various countries, they have to face various types of challenges and various types of issues. Like
some of the country are not being encouraged while they are working with the other country and
their are also many countries that are having various types of tariffs and these countries are also
having restriction for trade. Some of the major challenges that are faced by the WTO while
encouraging good trade relation with the countries are as follows:
1. lack of transparency – There is a lack of transparency in the negotiation of of WTO as
there are no specific rule or there are no special definition for creating a difference
between the developed and the developing countries. Because of that many of the
countries are listing themselves as developing countries so that they can get special
treatment. Through this they will also be able to get the subsidiary which the other
developed countries are getting.
2. E- commerce - as the world is moving very fast forward and the technological
advancement is also happening very fast. There are various countries that have also make
sure that they are doing their trades through digital platform. The problem that arise here
is that the trade platform was changing very significantly but the rule that WTO made
were not able to keep up with the pace of the trade landscape (Etemad and Dulude,
2018). With Covid 19 also in action, more and more countries are adopting the digital
platform for the trade and the WTO is also not able to keep with its pace.
Applying various Theories for effectiveness of WTO
According to the views of Chios Carmody, There are various theory that are applied so
that the policy formulation can be easily made and when these type of policy are formulated it
will affect the country's trade company. There are various different types of theory that is safe
guarding the trades that are happening every where. Some of the theory that increases the
effectiveness of WTO are as follows:

1. dispute settlement system – with the help of dispute settlement system they are able to
make sure that all the trade are being done in a peaceful manner. For maintaining peace
the WTO will also ban many items from being traded. These type 0of policy bis harming
various different types of traders (Peters, 2017). Like in some country the trade of tusk is
illegal and the there are various trader who are dealing in them so it will be a situation of
loss for them.
2. Increasing and decreasing trade relation – there are various country that are indulged in
the activity of terrorism and the trade with these countries have been banned by WTO so
it is affect all those trader who are trading in those countries.
Analysis and discussion
Analysis and research on World Trade Organisation examines importance of trade
policies in trading systems. Fair trade policies renders global stability and development. It
formulates different policies which support developing and undeveloped nations to prevent
issues and challenges faced in performing foreign trade practices. trade relationships supports to
alleviate poverty, develops employment opportunities, and increase the cash inflow in the
economy. Hierarchical structure is been followed in order to formulate and implement decisions.
World Trade Organisation also performs trading practices according to the legal and government
policies. Economic development promotes reduced cost of production which reduces the cost of
finished goods and further reduces the cost of living. It renders investment opportunities to the
businesses economy and promotes easy international trading business. It reduces the barriers of
global trading activities which promotes economic welfare (Esfidani and et. al., 2018).
From analysing about WTO it is found out that they were formed so that the trade that is
happening between the countries can be regulated. Before the formation of the world trade
organisation there were no rule and regulation that were motivating healthy trade. Before the
formation of the world trade organisation there were various types of conflict that were
happening in between the countries. Many a times there were war in between the countries and
these war resulted in the loss for various countries. To regulate all such activities and to promote
healthy trade the World Trade organisation was formed. The thing that is motivating the World
trade organisation is to create an environment where all the countries can freely commence trade
with each other. World Trade organisation is acting as a regulatory body for the trade between
the countries.

They are the one that will be sitting the rules for safe trade and they will be developing
the rule and the system of trade. For making the trade practice healthier the WTO has set some
universal trade charges and trade restriction, so that the smuggling or the trade of the illegal
items any be stopped. The thing that is motivating WTO is the factor that they are the one that
are responsible for conducting fair trade practices. They also are the open that are going to make
sure that all the information regarding the trade regulation and regarding the trade practices.
WTO must ensure that there is a transparent flow of all the data. The main purpose of WTO is to
ensure that the peace is being maintained. By regulating the trade systems they have ensured that
the safety values like the public safety and the environment safety is being taken care off. They
want to convey the message that they are abiding by all the decision that were made in the
general committee meeting (Etemad and Dulude eds., 2018).
There are also various different type of function that the WTO is having in their working.
Due to them the working of WTO is smoothly possible. WTO is the governing body for all the
legal trades that are happening all over the world. Their trades that are happing with the
governance of the WTO are te legal trades where as the trades that are happening without any
part of WTO are all termed as illegal. One of the major function of WTO is that they are
responsible for managing the trade conflicts between the countries and they are the one who will
be framing the policies regarding the trade between various countries.
Another one of the function of WTO is that they will make sure that all the trade
practices that are happening all over the world is not harming the environment by any means
and they are also keeping in mind the safety of the citizen that are abiding in those countries that
are doing the trade practices (Gaur and et. al., 2019). They should make sure that the trade that
is happening is not disturbing the peaceful environment of any country. They are also
responsible for the regulation of the funds, as they allot the fund to various countries so that they
can freely trade with each other. They also formulate the rule for the underdeveloped countries,
so that the trade practices that is happening in those countries can all be conducted by someone.
They also frame the policy with the collaboration with the local government so as to abide
within all the government regulation. The government is also given the power regarding any of
the unjust or the illegal practice that is happening in them.
Through all this function they are making sure that they are developing the under
developed countries. WTO is making the trade between the under developed and the developed

countries so that it may ultimately benefit in the development of both the countries (Guercini
and Milanesi, 2017).
While the WTO is doing all this they some time also have to face some of the serious
problems and issues, they have to deal with all of them so that they can maintain the way fo their
working. On of the major problem is that their are various different countries that are not giving
the other country to trade with them due to some of the conflict for example USA have banned
trade with China and India have also banned their trade relation with China. These type of thing
are leading to a very heavy dispute in between the countries. Another one of the major issue is
that,as many of the country are doing their trades through the online platform and all over the
world the trades have been digitalized but the rules regulation them are still not made or they are
in the process of their formation. As there is no set definition for which country can be termed as
the developing or the developed country so there is a chaotic situation arising in between the
trade. As the underdeveloped country are listing themselves as the developed country and they
are like wise enjoying all the benefits that the developed countries are being provided. Many of
their function and their decision also lacks transparency in them so many of the trading countries
are taking the benefit of the same (Hu, Chang and Hsu, 2017). Although WTO is governing all
the trade activities but ll around the globe their were various illegal trades that are taking place.
Due to these type of trade the safety related issues are being compromised as this illegal activity
are paving way for terrorism.
It is also analysed that there are various types of theories that were helping in the
assessment of the WTO . The theory were all made so that they may have significant
contribution in increasing the effectiveness of WTO.
CONCLUSION
From the above report it can be concluded that WTO was formed so that they can
regulate all the activities in regard with the trade that is happening in between the countries.
WTO is responsible for maintaining a peaceful relation in between the countries. It is also
concluded that they will be framing various types of policy so that all the country can mutually
agree to it. These policies are formed with keeping in mind the rule and the regulation that are
made the government over in that country. Through this report is is also found that the
government of the respective countries is being provided by enough powers so that they are able
to maintain peace in their country. The thing that is motivating the WTO is that they are the one

who will be safeguarding the trade practices that is being followed all the country and they are
the one that will make sure that their is no harm done to the safety of the people and the
environment. It is also concluded that the function of WTO is not only limited to the regulation
of the rules but they are also the one that will manage the funds required for the trade. Although
they are able to maintain all this but they sometimes have to face the problems and they have to
overcome it so as to maintain a peaceful trade. It is found that WTO is having lack of
transparency with their decision and due to this many of the countries are taking the benefit of
the same.

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Online
MANAGING THE CHALLENGES OF WTO. 2021.[online]. Available
through:<https://www.wto.org/english/res_e/booksp_e/casestudies_e/case43_e.htm>
World Trade Organization (WTO): Objectives and Functions.2021.[online]. Available
through:<https://www.yourarticlelibrary.com/trade-2/world-trade-organization-wto-
objectives-and-functions/23529>

Theory and Theoretical Approaches to WTO Law. 2016.[online]. Available
through:<https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1087&context=lawpub>
https://www.wto.org/english/news_e/pres20_e/pr862_e.htm

APPENDIX
The above picture, shows trade recovery of pre-COVID era. The blue lines states the
merchandise trade, the green line states the trade trend between 1990-2008 and the trend
between 2011-2018. The COVID 19 era define the huge financial crisis in the international
trade.
The above picture states the economic crisis due the global pandemic in year 2019-2020. where
the blue line states the optimistic change, orange line states the pessimistic change and green
shows the trade trend of year from 2011-2018

ONLINE
WORLD TRADE ORGANISATIONAL graph 2021.[online]. Available
through:<https://www.wto.org/english/news_e/pres20_e/pr862_e.htm>