WTO: Economic Cooperation, Crisis, and Functions Analysis

This report offers a comprehensive analysis of the World Trade Organization (WTO), examining its core functions, including trade regulation, dispute settlement, and trade policy reviews. It explores the economic and political impacts of the WTO, highlighting its role in facilitating free trade and its influence on national economies. The report delves into the challenges and crises faced by the WTO, such as the conflicts between developed and developing nations, the slow pace of decision-making, and the pressures from various societal groups. Furthermore, the report discusses the WTO's role in fostering economic cooperation, emphasizing its importance in promoting transparency and coherence in trade policies. The paper concludes by assessing the organization's effectiveness and its ability to adapt to the changing landscape of international trade and political economy.

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EXECUTIVE SUMMARY:
The paper presents a discussion on one of the most crucial international organization operative in
today’s world influencing the massive trade transactions going around. The biggest channel
through which globalization could actually become possible in literal sense was to make the
cross-border transactions easy and hassle free lying outside of the political and economic
restrains. However what has been found thet the multiplicity in the national structure and policies
of the nations leads to difference of opinion that had to be s in order to bring them all under
unified platform. This initiated the existence of WTO that got reshaped over time with the
change in wind of international politics. The discussion take s us to the recent crisis in the
organization and operative inefficiency on the face of increasing confliction. This hampered the
intention of economic cooperation allowed the unit to go for transformation and changes in
policies to ascertain free flow of trade with integration among economies of world.

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TABLE OF CONTENT
Introduction......................................................................................................................................5
What is WTO...................................................................................................................................5
Functions of WTO:..........................................................................................................................7
Economic and political impact of WTO..........................................................................................9
Crisis in WTO:...............................................................................................................................11
Reasons behind issues:..................................................................................................................12
WTO & economic cooperation:.....................................................................................................13
Conclusion:....................................................................................................................................14
Reference:......................................................................................................................................15

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Introduction
In the modern world of growing connectivity and globalization, international trade is the
crucial instrument playing important role in cross border share and exchanges of goods and
service. With the passage of time, world grows compact and integrated through extensive trade
taking place. Trade not only let the countries access to each others’ production but also feeds into
the need of the business to expand based on evolving market demand. It is to be kept in mind that
the countries differ in terms of geographical positioning, natural resources possessed, prevalent
political and economic conditions (Sunkel & Inotai, 2016). This influences the mode and extent
of trade based on differed policies taken up based on the varied national economic situation. This
multiplicity can possibly lead to difficulties in carrying out exchange of goods and services. To
bring all nation under the control of one organization based on pre-fixed rules and regulations to
be followed in trade, the World Trade Organization came into existence.
The paper is to present a discussion on the overall information of WTO focusing mainly
on finding out the principle reason behind recent crisis diagnosed within the organization. The
discussion further drives our attention toward how well the understanding of economic
cooperation gets justification through the analysis made in the report.
What is WTO:
World Trade Organization an intergovernmental international organization that controls
and regulated the trade taking place worldwide among nations. Since 1995 January 1, the
organization is operative and came into existent through Marrakesh Agreement. This agreement
replaced earlier General Agreement on Tariffs and Trade (GATT) and was supported and signed
by 123 nations of the world in 1994 The organization as global international body deals with the

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regulation policies and practices regarding goods and service trading as well as intellectual
property rights among nations who make negotiations and sign the agreement. The agreements
further get ratified in subsequent parliaments of the nations leading to fortified trade
negotiations. The major issues that are focused by WTO are mainly derived from trade
negotiations made in Uruguay Round form 1986 to 1994 (Abdelal, Blyth & Parsons, 2015).
Main WTO agreements are Agreement on Agriculture, General Agreement on Trade and Service
and Trade Related Aspects of Intellectual Property Rights. Four major committees of WTO are:
Council for Trade in Goods
Under the Council for Trade in Goods, there are 11 committees every one assigned with
specific task. All the existing members of WTO take part in the functioning of the all the
committees
Council for Trade-Related Aspects of Intellectual Property Rights
This segment deals with intellectual property rights and every information on this. All
the official news, data, information that are recorded in the WTO and TRIPS Council as well as
WTO’S interaction with other international organization
Council for Trade in Services
This segment is operative under the control and guidance of General Council. This has
the responsibility of supervising the operation and functioning of General Agreement on Trade
and Service. The segment is open for membership of all the countries. This segment is relaxed
toward creating as much subsidiary body as required.

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Trade Negotiations Committee
This segment mostly deals with talks round of current trade. The committee was assigned
with Doha Development Round. Financial services, GAT rules, commitments, and domestic
services are the three subsidiary bodies of these service council.
Functions of WTO:
The organization forms the foundation of a multilateral trading system through
supervision, implementation and administration of agreements covered among nations. It also
makes provision of an international forum that takes care of all the negotiations required in
settling disputes taking place in world trades. WTO also makes propagation and review of the
trade policies in different nations with an aim to ascertain transparency an d coherence of trade
policies through surveillance of world economic situation and policies (Drezner & McNamara,
2013). Moreover the organization prioritize providing assistance to least developed and
developing nations with low income level to let them adjust to rules of WTO by way of technical
cooperation and rigorous training. Apart from setting rule there are wide ranges of purposes
served by WTO are :
Implementation and Monitoring:
Government ratification are important for WTO agreements to be transparent. Moreover
it confers notification to WTO regarding enforced law. It I is the duty of the various committees
under WTO to ensure the follow up of these requirements
Dispute Settlement:

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There is a wing called Dispute Settlement Understanding under WTO that plays
important role in in settling down the issues and quarrels taking place among nations. This
enhances the flow of free trade. Based on any infringements of right made by nations they can
come up with their complaints that gets judged and settled based on the interpretations derived
from commitments made in agreements.
Builds Trade Capability:
The agreements followed under WTO provide special benefits in favor of the developing
countries in form of support. It includes longer time period for implementation of agreements to
be effective, measures to enhance the trade opportunities while boosting the capacity f trade by
the nations. It also allows the nations to upgrade their technical standards as well be able to
handle disputes.
Outreach:
The organization maintains connection with international organizations both
governmental and non-governmental, parliaments, media and layman based on the current
aspects ongoing within WTO. This action aims to increase the cooperation as well as awareness
of WTO activities among people.
Economic and political impact of WTO:
Certainly the operation of WTO and its regulations through polices have some impacts on
the economic conditions of nation. The most important channel is through which it brings peace
is handling the disputes and issues quite constructively. With growing volume of trade and

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number of countries involved in trade, the complexity in the trade process arises that needs to be
neutralized which is done rightly by WTO. The main function of WTO is to ascertain the free
flow of trade without hassle. Now free trade creates much more benefits for the nations (Oatley,
2015). More of the variety of goods with good quality can enter the national market that also in
lesser price. Moreover, trade acts as stimulus to economic growth. Higher the trade volume more
is the revenue earned and increase in basket of goods that enhances the lifestyle of the people
leading them toward developed condition (Dutt, Mihov & Van Zandt, 2013). More national
output leads to greater national income as well as per capita income making people live affluent
life.
WTO helps government in devising strategies focused on trade policies. It allows
government adopts more balanced trade policies. It provides shield to the government against
narrow interest groups. pressure groups. This allows the national government to take up policies
that benefits all rather than facilitating some tradeoffs benefitting one group against others.
Encouragement of good governance is another greater impact of WTO on national as well as
international economies. Being one of the most powerful secretive body of international
importance, the organization turning into global government controlling almost 134 nations of
the world including biggest economies like USA, India and China. The body is representative of
rule based policy regime of economic globalization that announces commercial interests among
nations to be superseded at its best (Hoekman & Mavroidis, 2015). Hindrance of operation and
expansion among any global nations are to be subordinated. The hindrances are generally
economic policies imposed politically or the variant democratic processes involved with
different countries. The WTO as a policy maker acts on behalf of the people who work and their
labor rights, protection of environment, provision and protection human rights, rights of the

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consumers, local culture and social justice for all of it member countries. The organization plays
immense role in maintaining national sovereignty of world nations and binding these multiplicity
of national political differences through one chord.
Crisis in WTO:
Despite the greater role the organization plays in the politics and economic of nations, the
WTO has fallen under strong attack of allegations and operative inefficiencies. Criticisms are
reflective of perceptions that are multiple based on the fact. What is ideally thought that all the
problems will be resolved by WTO and what reality drove was the body failed to take care of
many issues that emanated from process of globalization. The developing country with larger
majority among themselves believes that the operation of WTO is biased and makes agreements
asymmetric to their interests(Wilkinson, 2013). The WTO policies creates binding upon the
nations that often leads to disappointment in terms of trade related support provided by the donor
countries (Donnan, 2014). The financial backers have failed to make provision of adequate
funding for its own secretariat that takes care of the dispute settlement being burdened with
financial and technical assistances demand as well as major accessions.
One of the major crisis going within WTO is the confliction between developing and
developed nation mostly due to difference in their opinion based on the difference in their
outlook and needs (Wilkinson, 2013). Developing nations have many obstacles thet require them
to go for productions and exchanges without much protectionism. The interests of the two type
of nation clash as the developing ones seem to oppose new changes made to the policies. On the
other hand the developed nation tries to control the decision in their favor through playing
substitutive role of power owned global civil societies.

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There are indications of growing discomfort and frustration among business community
and investors because of the slow pace of the decision making process followed in WTO. The
results coming after negotiations of the nations are also reason of dissatisfaction. The
international body is operative under immense pressures mostly conflicting. While the civil
societies apply lobby for the expansion of their mandate and power which requires trade to be
sanctioned and agreements enforced protecting and maintaining labor rights, environmental
standards etc. The pivotal international body is in crisis of proper leadership that is evident in
failure of the organization in its duties and implementations (Hoekman & Mavroidis, 2015). The
combined decision of major industrial counties that could initiate changes and reforms in the
drooping system are now diagnosed with internal divisions and conflicts.
The WTO has undergone changes in its outlook of the policies, objectives and negotiations from
Uruguay Round to Doha Round. The rounds mostly focused on the liberalization of the countries
enhancing their economic growth throughout. WTO as backbone of the international trade
provided rights in form of rules and allowed each nation to experience increased openness and
trade. These had higher implication on developing economies that are economically untapped
with lot more potential to grow. The failure of the WTO negotiations has been received
muchseverely by these developing fragile economies. This further expedited the loss in
confidence as dispute settlement as well as trade facilitating unit to bring actual growth among
the nation through integration and cooperation.
Recently the Trade Policy Agenda of USA has evoked crisis in the organization as the
negotiations empower US to act much liberally falling outside of the control of the WTO.
Itdisregards multilateral trade, prevents member nations to interperet their trade rights, prevents
WTO rules to change the national policies of US. This kind of disrespect coming from biggest

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economies of world like US might influence others to follow the same affecting the harmony
among nations and failing the very agenda of WTO. Quite surprisingly China has not followed
the footsteps of US keeping its faith alive in WTO mitigating a bit of the ris from increasing.
Reasons behind issues:
One of the major reason behind such crisis inflicted in WTO is that it is the source of
unequal competition. The Uruguay Round more specifically is major contributor to the
inequality in competition because: Developed countries try to provide lesser access to their
markets restricting many of the products in their market coming from developing countries. It
provides only 3.8% openness to the them compared to 4.3% access to the developed countries
(Wilkinson, 2013). This discrimination is implemented through imposition of higher tariffs even
on common products like cloths, fish, leather and agricultural goods. This makes the products
costlier loosing the international demand that affects the economy of such developing nations.
The quantitative restrictions are still operative in many countries of the world specially in
clothing and textiles export. The phasing out process is very slow and that is becoming difficult
for poor and small economies to trade and survive. The agricultural agreements taking place in
WTO has initiated competition between developed countries’ farm production through subsidy
and unsubsidized farm produces in developing nations agriculture. The protectionism in form of
safe guard and anti-dumping policies are still under criticism as the rules possess loopholes.
They are misused in order to prevent competition coming from countries that produces following
labor-intensive technique. The TRIPS, which is one of the important negotiation for the countries
involved in trade, has been inefficient (Hoekman & Mavroidis, 2015). It has made the essential

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goods and technology like seeds and medicines too expensive. Yet it has not been able to prevent
the biological piracy going on by the foreign nations.
The WTO follows consensus decision making that seeks for participation, opinion and
approval of every nation included within its operation. This process prefers taking into account
the presence of all political parties which leads to complexity and longer time period for any
policies to be ratified and implemented. The operation and planning of the WTO revolves around
only the official member sit has making the organization member driven to the world. This
confines the view of the organization stopping its growth in order to bring overall changes in the
world trade. Adequate regulation of the trade issue requires the firm to interact more actively
with other actors. At the core the organization believed in the inception that harder the structure
of law followed in dispute settlement, better is the general outcome. This sometime has fallen
reverse indicating the failure of the idea. Rather consideration of flexibility, in its guidelines and
dispute settlements rules implemented in both domestic as well as international issues could
avoid many problems of the firm. More than 80% of the members of WTO comprise of
developing nations and they are allegedly falling victim of differential treatments and bias in
actions. This has led to agitation of the developing countries like China, India etc.
WTO & economic cooperation:
The underlying importance behind economic cooperation is immense. It not only
supports the nation’s development through utilizing the resources, knowledge but also make
cooperation to international countries contributing to foreign policy framework. Economic
cooperation between nation benefits all the nations under cooperation strengthening the
institutional framework and bridging the gaps in terms of economic and political activities.