Benefits of the World Trade Organization
By Mike Harrison
One of the biggest firms associated with globalization is the World Trade Organization. The World Trade Organization is the only international body that deals with the rules of trading between nations. It has evolved over the past half century into an entity that contract with the trade of services, intellectual property as well as its original intent of the trade of goods. The WTO controls most trade in the world today through over 100 countries, and even more on the way. The World Trade Organization is beneficial economically and we should support its principles.
The original and main goal of the WTO is to remove trade barriers between countries, which is a major idea behind globalization. Anyone who knows the slightest bit of economics knows that trade is beneficial to a country as a whole. When free trade is allowed it opens up foreign markets for domestic producers. It also opens up the possibility of foreign competition in domestic markets. This fact will lead to the reduction in price of many products, which will benefit the consumer. Trade restrictions hurt the consumer, and this is a problem that the WTO is charged with addressing.
In the 1980s when Japanese cars were quickly gaining a foothold in the American market the US limited the number of imports from Japan, in theory to protect the American worker. In response to this, car prices rose extremely. If the imports were to be allowed into the United States it would no doubt have a short-term negative effect on the economy. This would all change however when a shift in the economy occurred or the American producers were forced to make better products which in the end will benefit the costumer. The long-term benefits, although hard to see by many politicians, would benefit our country in the long run.
The WTO also makes life much simpler for companies wishing to import raw materials from outside of the United States in order to make finished goods through Non-discrimination. If the WTO did not exist then the United States in all likelihood would have different import duties applying to different nations. Therefore if a company from the US wanted to import a raw material it would not be a simple case of comparing prices from differing countries. The company would have to make calculations and study the regulations of buying from certain countries making life much more complicated then it has to be. Since the rules of the WTO apply to all member countries there is no confusion about the import duties and companies can choose simply from the cheapest producer thus making the final product cheaper for the consumer.
Aside from the WTOs involvement in the trading of goods it also regulates services and intellectual property. The service sector which includes banks, telecommunications companies, tour operators, hotel chains and transport companies, can now enjoy the same freedoms that were originally intended for the benefit of goods being imported and exported between countries. These services are now freer to open business abroad then ever before. Intellectual property has gained the same benefits under the WTO. Things such as copyrights, trademarks, geographical names used to identify products, industrial designs, integrated circuit layout-designs and undisclosed information are now protected when trade is involved.
Disputes between countries can now as well be solved with the WTO. So if America has a problem with another countrys trade practices it can settle it through consultation. If that fails there is a mapped out, stage-by-stage procedure that includes the possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. So if America feels a foreign country is treating it unfairly it can use the WTO to solve the problem.
The United States can yet again gain from the WTO when China is admitted. China is potentially the biggest market in the entire world. It is vital that the United States get into Chinas market if it wishes to stay competitive on the world stage in the future. China is on its way to attaining mega market status as a consumer of technological goods and services. Countries unwilling or unable to compete for a share of this market place put themselves at a substantial competitive and economic disadvantage. The admission of China into the WTO will greatly benefit many companies across the board in the United States. The potential for computer makers, software makers, internet providers and internet service providers are immense and American companies could gain tremendously from their potential. These benefits will not be limited to the big name companies of the United States either. Smaller start-up companies will be on the same grounds now and receive the same benefits as larger firms. The small companies will now be able to sell their products in China where as they could not do so before because of the numerous obstacles that only the larger firms were equipped to maneuver around in China. Thus all businesses working from within the United States will have the fair opportunity to extend their reach into China.
China will also receive the same benefits once it enters the WTO and will be able to sell its products much easier to member countries. This fact will help the Chinese worker because member countries will tend not to buy Chinese goods if they know they were made in sweat shops or other places hurtful to the workers. The WTO will recognize this fact too and force China to provide better working conditions for its workers.
The World Trade Organizations principles should be supported and embraced. The WTO is a large step in the right direction to globalization. The long term benefits of free trade far outweigh only argument critics can come up with, which are short-term economic losses. The WTO is structured in a way that every member country is treated fairly and if not they can safely argue and settle disputes. The potential for new markets for all business world-wide are also great, and this in itself should be enough for any person to agree with its necessity.