Discuss the World trade organisation(WTO) policies that govern business across the globe.
WTO is an international organisation that deals with trade policies amongst member states.The organisation seeks to ensure that member states engage in business with minimal hurdles to maximise ease and profitability.
cost of production
state’s taxation policy
voluntary trade restrictions
Discuss the World trade organisation(WTO) policies that govern business across the globe. WTO is an international organisation that deals with trade policies amongst member states.The organisation
Running head: WORLD TRADE ORGANIZATION 1 World Trade Organization Student’s Name: Affiliation: Date: World Trade Organization Introduction According to (Mavroidis & Sapir, 2019) World Trade Organization is a global organization that deals with trade rules amongst nations. The organization works on the basis of agreements and negotiations made by individual states through their parliaments. WTO seeks to ensure that producers sell their goods and services fairly across the globe. As postulated above, the organization strictly adheres to rules and regulations set by individual countries to facilitate fair competition and trade. Producers from different platforms such as agriculture, banking, textile, government purchases and telecommunication are among the common items of trade within the organization. However, there are instances where member countries may limit influx of foreign goods to her territory based on different circumstances. The essay seeks to address the reasons why individual states may limit influx of foreign goods according WTO. Cost of production In spite of common principle of free international trade, each country erects some barriers and stipulations. The regulations seek to protect producers and companies within the territory. Different countries have different taxation system culminating in different cost of production. Therefore, for countries that have a higher cost of production, they will tend to erect trade barriers for importers of the same product (Mavroidis & Sapir, 2019). The measure seeks to empower their individual producer and companies’ hence ensuring perpetuation of business. Such moves gave birth to protectionist policies that played critical role in rescuing United States’ economy in 2007 and 2008. They state limited the quantity of foreign sugar entering to secure local producers. The move was effective towards empowering the staggering economy. States’ taxation policy Each country has a defined taxation policy. Developing tend to have higher taxation rates compared to developed nations. Consequently, such countries end up increasing tariffs on imported goods and services. Such a move discourages importers and influx of foreign goods considerably decreases. For instance, United States being a member state of WTO usually imposes high taxes on products produced locally (Puplampu, 2016). Oranges are among the goods produced within United States, therefore, the government increases taxation up to 40% of total value. The measure does not only encourage consumption of local oranges, it also discourages influx of foreign of oranges. Antidumping policies Different economic standards culminate into varied cost of production amongst individual states. Therefore, World Trade Organization formulated policies that would eliminate ‘unfair price’. According to World Trade Organization, Unfair price refers to a low price for goods compared to their individual countries. The stipulations come up with a production cost, which is the determining factor for most policies. Department of justice in United States affirmed that normal profit should not exceed production cost (Puplampu, 2016). In pursuit to discouraging dumping, some countries may come up with policies that will hinder influx of goods that will move local producers out of business. Failure to enhance such measures leads to collapse of companies that provide employment and tax. Voluntary trade restrictions Voluntary restrictions refer to barriers placed by foreign firms that limit the amount of goods exported to a, particular country. The stipulations became famous in 1890s when United States government persuaded exporters to limit the number of vehicles and steel products entering a particular country. The move seeks to limit products for the sake of local products. It has been successful over the years and it has enhanced balanced trade that culminates in loyalty and friendliness. WTO has played key roles in facilitating such moves for the sake greater economic growth (Siddiqui, 2016). Conclusion World Trade Organization has played significant role towards enhancing good trading relations within nations. Cost of production, tariffs, antidumping policies and voluntary restriction are among the strategies WTO has accepted to protect individual states hence maintaining healthy business. References Mavroidis, P. C., & Sapir, A. (2019). China and the world trade organisation: towards a better fit. Bruegel Working Papers. Puplampu, K. P. (2016). The World Trade Organisation, global trade and agriculture. In Beyond the’African Tragedy’ (pp. 257-270). Routledge. Siddiqui, K. (2016). World Trade Organisation, International Trade and Prosperity. International Journal of Social and Economic Research, 6(2), 1-28.