Saturday, 4 February 2017
WTO (Chap 2 of book)
What is the WTO?
- Where govs negotiate, enforce and revise rules regarding int’l trade policies
GATT was founded in 47’, changed to WTO in 94’
- Small compared to other int’l institutions : $170 million budget
- 3 district categories: it’s a set of rules, an intergovernmental bargaining process & a
dispute settlement mechanism
2 core principles:
Market liberalism: a world open to trade will raise std of living; the more free ﬂowing
it is, the more the gains
• Nondiscrimination: each member faces identical opportunities to trade with another
member. Govs are not allowed to favour certain nations, except in the case of a
regional trade agreement. They are also prohibited from using domestic policies to
provide an advantage to domestic ﬁrms at the expense of foreign ones.
- Intergovernmental bargaining process is primary decision making process, done in
rounds. Today, 8 have been completed, 9th is stalled.
- Dispute settlement mechanism makes sure gov’s respect the rules and principles
- Hegemonic stability theory: the WTO has the characteristics of a public good (non-
rival and non-exclusive) and therefore would face pb of free riding as there are many
members. However, the theory states that when there is a Hegemony, the most
powerful state will supply more than the others, and free riding pb will be overcome. Its
beneﬁts are superior to all its costs.
- Today, WTO is evolving, primarily