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WTO: An introduction to the World Trade Organization

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  1. Introduction.
  2. GATT (General Agreement on Tariffs and Trade).
  3. The Tokyo Round of 1973-1979.
  4. Hoekman and Kostecki description of the functions of WTO.
  5. Conclusion.

The World Trade Organization is the most recent result of international efforts to reduce barriers to trade. It is an institution in which membership is voluntary, but it is also an organization with legal status. I will explain more about this later. In this paper I will explore the history, structure, and function of the WTO. In the 1920s and 1930s, governments engaged in a race toward protectionism. When the U.S. passed the Smoot-Hawley Tariff Act of 1930, many countries followed suite and raised tariffs. According to Bagwell and Staiger, in The Economics of the World Trading System, ?under this act, average U.S. tariffs rose from 38 to 52 percent (43).? Although there were many attempts at international cooperation over trade measures during the time period, the 1920s and the 1930s were ultimately eras of protectionism, with drastic consequences ? i.e. an economic depression that lasted years and which was felt in countries around the world. Bagwell and Staiger characterize this period as one in which ?realism? drove government policy, and they describe the failure of trade agreements in this era:

[...] The purpose of the WTO with regard to those nations that may be economically classified as ?developing,? therefore, is not as simple as it seems, for while the stated goal of the organization may be to integrate these nations into the world trading order and help them develop economically, the WTO is also an international organization based on consensus, and those members with the most wealth end up having the most power. Another major function of the WTO is cooperation with other international economic organizations. [...]

[...] The links between trade and financial or macroeconomic policies are important because inappropriate macro policies may give rise to protectionism The WTO is also connected to other trade organizations, though the collaboration is in these cases less prominent: [other economic bodies besides the IMF and the World Bank] that have the closest links with the WTO include UNCTAD [United Nations Conference on Trade and Development], the International Organization for Standardization the Brussels-based World Customs Organization (WCO) and the World Intellectual Property Organization.? In this paper I have presented an overview of the World Trade Organization by focusing on its technical aspects. [...]

[...] According to WTO's web site there are also ?numerous specialized committees, working groups and working parties? that ?deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements ( In addition, there is the secretariat, which acts as an adjunct to the main organization, serving it in several capacities including technical support, legal support, and public relations ( Turning to the legal status of the WTO, which will help us understand its structure, Hoekman and Kostecki state: WTO has legal personality and has been accorded privileges and immunities similar to those accorded to the specialized UN agencies Joseph Nye, in Understanding International Conflicts, An Introduction to Theory and History, describes the legal status of the U.N.: only area in the U.N. [...]

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