International trade is defined as the exchange of goods, capitals, services across international borders. The increased amount of international trade is necessary for the development of the economy of any country of the world; it plays a pivotal role in the economic development of any country because firstly it increases the Gross Domestic Product of any country, because if more trade is done along the international borders then the industries of any country have the opportunity to reach the global markets. As a result of this, industrial development of a country takes place as the manufacturing outcomes tend to increase, hence it can be stated that for the increment in the rate of industrialization it is necessary to develop such a setting in the world which promotes the global trade taking place amongst the countries.
Since it is known that every country of this world has a certain topographical location and so it is impossible for any single country to have all the necessary resources therefore to coexist in the present time, it has become increasingly crucial to share the resources with others in exchange of some benefits; this as a result brings welfare for the whole of the world’s populace. The economic importance of international trade is certainly very much as it helps in reducing the unemployment levels, on the other hand the per capita income of the people also tend to increase if international trade takes place at a rapid pace. Along with its economical implications once has to keep in mind that its social, and political importance has also increased in the past few years. The concept of global village is solely based on the phenomenon of the establishment of such states which have soft borders as far as trade is concerned.As mentioned before as well that international trade is crucial for the development of the nations but unfortunately we have seen many disputes which were related to international trade therefore to regularize supervise and liberalize international trade World Trade Organization was formed by the major economic powers of the world in January 1995 under the Marrakesh Agreement. The WTO has 153 Members, at present and many others are seeking for its membership. The establishment of this organization dissolved the General agreements on Tariffs and Trade (GATT). The main motive behind the establishment of this very organization was to develop such an environment all across the world which is suitable for the development of the international trade.
Secondly developing the poorer third world countries was also amongst the objectives of this body. However as per the opponents of this organization the sole aim of its establishment was to make the rich nations richer and the poor nations poorer by exploiting the resources of the underdeveloped countries of the world. The critics are of the view that the nations which are economically stable back the policies of this organization as they want the system of free market economy to set in the world, which surely is not in favor of the less privileged countries, in addition to this multinationals are considered to be the main beneficiaries under the policies of WTO as they get more and more markets to operate in.
In sum the proponents of the global free trade are the ones which back the decisions and the policies of this organization where as the underdeveloped or the developing nations in the majority oppose the regulations laid by this body. The countries like China and India are the recent proponents of this body as they are growing at a rapid and brisk pace; so they feel that they are strong enough to compete in the global setting. Most of the critics believe that instead of supporting the less developed nations of the world, WTO has created an even fierce economic imbalance, as per these opponents WTO has been promoting trade strongly but unevenly.If analyzed from a neutral point of view in my opinion the performance of WTO has not been that bad as depicted by its opponents; it is a fact that many mistakes have been committed by the policy makers of WTO but this doesn’t to me, take whole of the credit from the shoulders of the WTO. Its performance since day one has been fairly good; if compared with other such financial institutions I would certainly rate WTO as the better one of the lot. Its comparison with other such major financial institutions of the world has been done in the later part of the report. The efforts of WTO in harmonizing the trade relationships amongst the countries has been phenomenal, previously the investors remained reluctant in making cross border investments just because of the political risks involved. The war risks, transfer risks, relations with other countries are some of the factors which used to restrain the investors from staking their capital .
But WTO has worked hard, made negotiations with the governments and then established such a financial environment in which the situation has improved than it was before.Some years back the trade between India and Pakistan seemed to be an impossibility but due to timely and apt backdoor interventions made by WTO both the governments agreed to commence the mutual trade; due to the beginning of cross border trade between Pakistan and India around 1.14 billion of the inhabitants living in both the countries are getting the benefits either directly or indirectly.
Many people are unaware of the fact that WTO has played a pivotal role in normalizing the economic ties between the two countries; even though there is a wide room present for further improvement in this domain but the current situation is lot better which was in the early 2000’s (Bank, 2008, p125-126). WTO played the role of a catalyst in the trade negotiations held between the countries; it was because of this body that the governments of both the countries agreed not to relate the political issues with the economic ties, in this way WTO provided an opportunity for the both the countries to grow. The trade volume between the two neighbors has been increasing exponentially ever since the improvement in the economic ties. Moreover the illegal trade amount between these two countries which was mounting up faced a downward trend as a result. As it is known that due to low per capita income these both economies are largely consumption oriented, this move boosted up the trade of the daily use products; which as a result consolidated to some extent the increased rate of inflation of both the countries and thus the lower class got some amount of relief.
Other than administering trade agreements, acting as a forum for trade negotiations, settling trade clashes, reviewing national trade policies, supporting developing countries in trade policy issues through technical assistance etc, there is another main cause which is served by WTO as it cooperates with other financial organizations around the world in order to harmonize the whole global economic setup. The performance of WTO in my opinion has been a mixed one when compared with the others working in the same domain. The performance of the Asian Development Bank is not commendable as the efforts made by it were not enough to tackle with the increasing issues of the biggest continent of the world; especially in the recent time of recession ADB has failed miserably in supporting the developing Asian economies; the condition of Pakistan and Bangladesh can be exemplified in this regard.
ADB should have helped them but it did not make any remarkable effort; the situation get so exacerbated that Pakistan had to seek for loans from IMF on strict terms (WTO,n.d.). Even worse is the story of the African Development Bank; many immaculate proposals and programs are present on paper but unfortunately the implementation has been zero, there is not much to say about the situation of AfDB as the ground reality says it all. The performance of EBRD and IDB in comparison with the other two regional banks has been far better as they have funded the developing economies of the region whenever they needed the support. Sufficient funds and aids were provided by IDB to the member countries; Haiti is about to receive $511 million from the IDB in debt relief; this is just one example of its kind there are many others available which back this argument. The task of WTO is an arduous one as it has to consider the problems of the entire globe not just a region; analyzed by keeping that under consideration , it has not presented that bad a show as claimed by its opponents.
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