The World Trade Organization (WTO) • Explained With Maps

Summary

The World Trade Organization (WTO), with 160 member states, is headquartered in Geneva and aims to liberalize global trade. Established post-WWII based on free trade theories, it evolved from GATT to WTO in 1995. The 'most favoured nation' principle governs trade, with exceptions for free trade zones like NAFTA, Mercosur, EU, and ASEAN. The WTO's budget supports dispute resolution, such as the Boeing-EU case. Agriculture remains a challenge, with the Doha Development Round failing to reach agreements, highlighting north-south disparities in subsidies.

Takeaways

• 🌐 The World Trade Organization (WTO) has 160 member states and is headquartered in Geneva, Switzerland.
• 📈 The WTO's primary goal is to regulate and liberalize world trade, with over 95% of global trade occurring between member states.
• 🏛️ The concept of the WTO emerged post-World War II, inspired by free trade theories and a reaction to economic protectionism seen as a cause of the war.
• 📜 The General Agreement on Tariffs and Trade (GATT) regulated international trade from 1947 until it was replaced by the WTO in 1995.
• 🌉 Membership in the WTO has grown from 23 founding countries to 160 members, with 24 observer governments.
• 🚀 Since 1950, world trade volume has increased twentyfold, with a significant portion of trade happening between industrialized nations and Asia.
• 🌍 The 'most favoured nation' (MFN) principle requires WTO members to extend trade benefits to all members equally, with free trade zones being an exception.
• 🔄 The four major free trade zones are NAFTA, Mercosur, the EU, and ASEAN, promoting regional integration as a step towards global integration.
• 📉 Global tariffs have significantly decreased from an average of 40% to 2.2% since 1945, reflecting the WTO's success in liberalizing trade.
• 💼 The WTO's budget supports the Dispute Settlement Body (DSB), which handles trade disputes, such as the EU's complaint against U.S. subsidies for Boeing.
• 🌾 Agriculture remains a contentious issue within the WTO, with grain prices influenced by demand, speculation, and weather, leading to food riots in 2008.
• 🔄 The Doha Development Round was an attempt by the WTO to establish a new trust basis, addressing the imbalance between northern and southern countries, but it has not yet reached any agreements.

Q & A

How many member states are there in the World Trade Organization (WTO)?

There are 160 member states in the WTO.

Where is the headquarters of the World Trade Organization located?

The headquarters of the WTO is located in Geneva, Switzerland.

What is the primary purpose of the WTO?

The main purpose of the WTO is to regulate and liberalize world trade.

What is the significance of the 'most favoured nation' (MFN) principle in the WTO?

The MFN principle requires that if one member state grants trade benefits to another, it must grant the same benefits to all other member states.

What is the exception to the MFN principle?

The exception to the MFN principle is free trade zones, which are regional agreements that allow for preferential treatment among member countries.

Name the four most important free trade zones mentioned in the script.

The four most important free trade zones are NAFTA, Mercosur, the European Union (EU), and ASEAN.

How has the global duty on goods changed since 1945?

Global duties have decreased significantly since 1945, from an average of 40% of the product value to 2.2% today.

What is the role of the Dispute Settlement Body (DSB) in the WTO?

The DSB handles trade disputes between member countries, such as the dispute between the United States and the European Union over subsidies for Boeing.

What was the impact of increasing grain prices on WTO member states in 2008?

The increase in grain prices led to food riots in several member states, including Mexico, Egypt, and Indonesia.

Why is agriculture still a contentious issue within the WTO?

Agriculture remains contentious because of the differences between northern and southern countries, with the latter suffering from subsidies provided by industrialized nations to their agriculture.

What is the 'Doha Development Round' and why was it initiated?

The 'Doha Development Round' was an attempt by the WTO to establish a new basis of trust and address issues faced by emerging markets, particularly in agriculture, but it has not yet reached any agreements.