World Trade Organization (WTO)

World Trade Organization abbreviated (WTO) this An integration organization established in 1995 with the aim of liberalizing international trade and regulating trade and political relations of the organization's member states.

The WTO is formed on the basis of The General Agreement on Tariffs and Trade (GATT), concluded in 1947 and for almost 50 years actually performed the functions of an international organization, but was not an international organization in the legal sense.

The WTO is responsible for the development and implementation of new trade agreements, and also monitors compliance by members of the organization with agreements signed by most countries and ratified by their parliaments.

The WTO headquarters is located in Geneva, Switzerland, the organization has a staff of about 600 people.

WTO rules provide a number of benefits for developing countries. Currently, developing WTO member countries have a higher relative level of customs and tariff protection of their markets compared to developed ones. Nevertheless, in absolute terms, the total amount of customs and tariff sanctions in developed countries is much higher, as a result of which access to the markets of products from developing countries is seriously limited. WTO rules regulate only trade and economic issues.

The history of the WTO

1947 - The birth of GATT. UN Committee consisting of 50 countries in Geneva to establish an International Trade OrganizationThe increasing role of world trade forced industrial countries to maintain limited cooperation on customs duties at the international level already in the XIX century.

The global economic crisis that broke out in 1929 and attempts to overcome it in some developed countries by directly protecting the domestic market with high customs duties from foreign imports showed that with increasing volumes of foreign trade, its institutionalization and supranational regulation in a recognized international legal framework are necessary.

The economic theory of comparative advantage, developed at the beginning of the XIX century, served as the economic foundation of the requirements for the liberalization of foreign trade David Ricardo.

The idea of creating an international organization designed to regulate international trade arose mainly through the efforts of the United States and Great Britain in 1944 on The Bretton Woods Conference where were founded The International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). The third pillar of the new economic order, along with the aforementioned organizations, was supposed to be the creation of International Trade Organization.

For this purpose, an international conference on trade and employment was convened in Havana in 1946, which was supposed to develop the substantive framework of an international agreement on tariff reduction, offer interested countries the charter of this organization, take on a coordinating role in simplifying foreign trade and reducing the customs burden on the way of goods from country to country. In October 1947, the General Agreement on Tariffs and Trade (GATT) was signed, which was initially considered only as part of a comprehensive agreement within the framework of the new international trade organization. This agreement, considered as temporary, entered into force on 01.01.1948.

Due to the fact that the USSR refused to be members of the IMF and the IBRD, he was not invited to participate in the Havana Conference. The Soviet government feared that the great influence that the United States had in these organizations and the beginning of confrontation between ideological blocs would not allow the interests of the USSR to be properly taken into account within these organizations.

In subsequent years, the GATT, although in a stripped-down form from the originally conceived, turned out to be a fairly effective system in which the average customsdutyit decreased from 40% by the time the agreement was signed in the mid-forties to 4% in the mid-nineties. In order to reduce direct customs duties and hidden, so-called non-tariff restrictions on the import of products from abroad, GATT regularly held rounds of negotiations between the participating countries.

As a result of long negotiations, an agreement on the establishment of the WTO was signed in 1994 in Marrakech, which entered into force on 01.01.1995.

The participating countries agreed that within the framework of this organization, not only trade in goods will be regulated (which has been the subject of the GATT since 1948), but also in connection with the increasing role of services in post-industrial society and their growing share in world trade (at the beginning of the XXI century - about 20%), it was adopted The General Agreement on Trade in Services (GATS), which regulates this area of foreign trade.

Also, within the framework of the Marrakesh Agreement, an Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) was adopted, regulating trade issues of intellectual property rights and being an integral part of the legal foundation of the WTO.

So since 01.01.1995, almost 50 years after the idea of creating an international organization and the existence of a temporary GATT structure regulating foreign trade issues, the WTO has started working.

The idea, purpose and objectives of the WTO

A powerful reminder that the pursuit of peace and security has led to the creation of today's global economic system. The global rules underlying the multilateral economic system were a direct reaction to the Second World War and a desire to ensure that it would never happen again.

The WTO has 164 members, and upon joining the WTO, the trade of each acceding country should become freer, and this in turn should lead to a higher level of political rights and civil liberties. However, the trend towards democracy is not encouraging. According to a source that measures progress towards democracy, in 2017, 71 WTO member countries experienced a net decrease in the level of political rights and civil liberties, and only 35 countries registered an increase, 2017 was the 12th year in a row when the number of deterioration exceeded the number of improvements.  According to the IMF, global GDP growth has averaged almost 4% per year since 1980, including this eleven-year period. Judging by these data, the movement towards prosperity does not keep pace with democracy. 

The United States and China have extensive bilateral trade and at the same time strengthen their weapons as a priority in case these weapons may be needed primarily against each other. The United States and China view their main trading partner as a strategic competitor with whom a conflict may arise.

The world of trade has become multipolar. The US is no longer the largest trading country, and taking into account the European Union as a whole, it is only the third largest trader. 

For 70 years, the United States has pursued a strategy based on the belief that leading a stable international economic system based on the principles of reciprocity, free market and free trade serves economic and security interests. 

Fair and reciprocal trade, investment and knowledge sharing strengthen alliances and partnerships that are necessary to achieve success in today's competitive geopolitical environment. Trade, export promotion, targeted use of foreign aid and modernized development financing instruments can contribute to stability, prosperity and political reforms, as well as the creation of new partnerships based on the principle of reciprocity.

The emphasis is on mutual benefit. Alliances deepen if they are mutual, fair and balanced. Instruments that promote development are still mentioned, and they can lead to political reforms, but not necessarily to peace, the ultimate goal of which is mutual relations.

I would like to believe that the support of the global trading system also contributes to the maintenance of world peace and the strengthening of democratic freedoms

Of course, we cannot be sure that the expansion of trade leading to prosperity guarantees the movement towards democracy in every country, but we know from the experience of 20-gocenturies and from later experience, that the opposite is true –the inability to maintain openness to trade, the subsequent economic downturn and high unemployment, leads to instability and a threat to peace both within countries and internationally

According to the declaration, the work of the WTO, as well as the GATT before it, is based on the basic principles, including:

  • Equal rights. All WTO members are obliged to provide all other members with the most-favored-nation trade regime (MFN). The MFN principle means that preferences granted to one of the WTO members automatically apply to all other members of the organization in any case.
  • Reciprocity. All concessions in easing bilateral trade restrictions should be mutual.
  • Transparency. WTO members should fully publish their trade rules and have bodies responsible for providing information to other WTO members.
  • Creation of existing obligations. Obligations on trade tariffs of countries are regulated mainly by WTO bodies, and not by relations between countries. And in case of deterioration of the terms of trade in any country in a particular sector, the aggrieved party may demand compensation in other sectors.
  • Safety valves. In some cases, the Government has the right to impose trade restrictions. The WTO Agreement allows members to take measures not only to protect the environment, but also to support public health, animal and plant health.

For WTO member States, the main objectives of WTO accession are:

  • obtaining the best conditions for access of domestic goods to foreign markets;
  • the possibility of resolving trade disputes through international mechanisms;
  • attracting investments from outside, as a result of creating a favorable climate for them and bringing legislation in line with WTO norms;
  • increasing access opportunities for local investors in the international arena, in particular in the banking sector;
  • formation of favorable conditions for improving the quality and competitiveness of domestic goods and services as a result of import growth;
  • participation in the formation of international trade rules taking into account national interests;
  • improving the image of the country as a full participant in international trade.

Map of WTO member countries

The WTO has 164 participants, 160 of them are internationally recognized UN member states, Taiwan (partially recognized), Hong Kong and Macau (2 dependent territories) and the European Union. In order to join the WTO, the State must submit a memorandum through which the WTO considers trade and economic policy concerning the organization.

Negotiations on Russia's accession to the World Trade Organization were conducted for 18 years, from 1993 to 2011. Russia joined the World Trade Organization and was included in official list of WTO member countries with the serial number 156, August twenty-second, 2012.

Advantages of the WTO

Ten advantages, or what advantages does the WTO system provide

1. The system helps strengthen peace

This may seem somewhat pretentious, and it would be incorrect to expect too much. However, the system does contribute to international peace, and if we understand the reasons, we have a clear idea of what the system is actually doing.

Peace is partly the result of the functioning of two of the most fundamental principles of the trading system: the unhindered movement of trade flows and the provision of a constructive and fair platform for countries to resolve disputes on trade issues. It is also the result of international trust and cooperation generated and strengthened by the system.

History is replete with examples of trade disputes turning into war. One of the most striking is the trade war of the 1930s, when countries competed in erecting trade barriers to protect domestic producers and retaliating against competitors' barriers. This was exacerbated by the Great Depression and eventually played a role in the outbreak of World War II.

Two events immediately after World War II helped to avoid a repeat of pre-war trade tensions. International cooperation in the field of coal and iron ore mining, as well as steel production, has been developing in Europe. And at the global level, the General Agreement on Tariffs and Trade (GATT) was created.

Both directions have successfully evolved, and now they are significantly supplemented and significantly expanded - one of them has formed into the European Union, and the other has turned into the World Trade Organization (WTO).

The WTO trading system plays an important role in creating and strengthening confidence in the principles of free trade. Particularly important is such an element as negotiations leading to a consensus agreement with an emphasis on strict compliance with the rules.

Sellers, as a rule, do not want to contradict their customers - the customer is always right. In other words, if trade flows flow smoothly, and participants voluntarily maintain healthy commercial relations for mutual benefit, then political confrontation is practically excluded.

In addition, well-organized trade relations also contribute to the improvement of general welfare at the global level. It also seems unlikely that the population of prosperous and prosperous countries is prone to aggression and the outbreak of military conflicts.

2. The system allows you to find a constructive approach to resolving trade disputes

With the growth of trade volumes, the expansion of the range of goods, as well as an increase in the number of countries and trading companies, there is a certain probability that disputes will still arise. The WTO system helps resolve disputes in a peaceful and constructive way.

The countries involved in disputes always strive to act within the framework of existing agreements.

However, there is also a downside to the processes of trade liberalization and expansion. The expansion of trade flows means a greater likelihood of disputes. Let loose, these disputes can lead to a serious conflict. But in fact, escalation of tensions in the field of international trade can be avoided because countries can turn to various organizations, in particular the WTO, to settle their trade disputes.

When "debaters" turn to the WTO, WTO procedures focus their attention on the rules. After a decision is made, countries try to focus on compliance with the rules and, possibly, the subsequent revision of the rules, rather than declaring war on each other.

3. A system based on rules rather than force makes life easier for everyone

The WTO cannot pretend to make all countries equal. But the Organization smooths out some rough edges from the point of view of equality, providing smaller countries with greater opportunities to defend their positions, and at the same time, freeing major powers from the need to negotiate trade agreements with each of their numerous trading partners.

Decisions in the WTO are made on the basis of consensus. The WTO agreements were agreed by all members, were adopted by consensus and were ratified by the parliaments of all member States. The agreements apply to everyone. Rich and poor countries have equal opportunities to challenge their right under WTO dispute settlement procedures.

The principle of non-discrimination, prescribed in the WTO agreements, avoids unnecessary complications. The fact that there is a single set of rules applicable to all members greatly simplifies the entire trading regime. And these agreed rules give governments a clear idea of which of the directions of trade policy is the most acceptable.

4. Liberalization of the terms of trade increases the standard of living

We are all consumers, and the prices we pay for food and clothing, necessities and luxuries depend on trade policy.

According to available data, consumers and governments of rich countries spend $350 billion a year to support agriculture. This amount is enough to pay for one and a half first-class round-the-world flights for their entire 41 million dairy cows.

Protectionism is expensive: it raises prices. The global WTO system reduces barriers to trade through negotiations, as well as through the application of the principle of non-discrimination. As a result, production costs are reduced (since imports used in production are cheaper), as well as the price of finished products and services, which ultimately reduces the cost of living.

5. A wider range of higher quality products

Imagine the whole range of imported goods: fruits and vegetables, food, clothing and other products that were previously considered exotic, fresh flowers from anywhere in the world, all kinds of household goods, books, music, movies and so on.

And now imagine also the goods that people in other countries can receive by exporting them from your and other countries. Import allows us to expand the choice of both goods and services, plus to ensure their higher quality. Even the quality of local goods may improve due to competition from imports.

The concept of a wide choice is not limited only to the question of buying imported finished products. Imports are used as raw materials, components and equipment for industrial production.

It expands the range of end products and services that are produced by domestic manufacturers, and this increases the range of technologies that they can use. For example, when mobile phones appeared, the corresponding services arose even in those countries that do not produce equipment.

6. Trade contributes to income growth

Reducing trade barriers allows you to increase trade volumes, which in turn brings additional income, both at the national and individual level. However, some adjustments are needed.

The fact that there is additional income means that Governments have resources to be redistributed.

Economists estimate that reducing trade barriers in agriculture, manufacturing and services by a third will contribute to the growth of the global economy by $ 613 billion.

7. Trade stimulates economic growth, which has a positive effect on the employment situation

There is no doubt that trade has the potential to create jobs. In practice, there is often factual evidence that the reduction of trade barriers has a beneficial effect on the employment situation. But the picture is complicated by a number of factors. Plus, the supposedly available alternative - protectionism — is clearly not an adequate solution to employment problems.

This is a complex issue and the approach to its solution should be appropriate. There is strong evidence that trade contributes to economic growth, and that economic growth contributes to the creation of new jobs. It is also true that some jobs will be lost even as trade expands. But thoroughanalysisthis suggests the presence of at least two problems.

Firstly, there are other factors. For example, technological progress also has a powerful impact on employment and productivity, creating some jobs and eliminating others.

Secondly, although trade clearly contributes to the growth of national income (and prosperity), it does not always involve the creation of new jobs, especially for those who have lost their jobs as a result of import competition.

The picture is ambiguous in different countries of the world. The average length of time spent looking for a new job in one country can be much longer than for a similar worker in another country, and under the same conditions.

In other words, some countries adapt better than others. This is partly because some countries have more efficient and flexible political regulators. Those who do not have them lose real opportunities.

Evidence also suggests that protectionism harms employment. For example, in the US automotive industry: trade barriers designed to protect jobs in the US by restricting imports from Japan have eventually made cars more expensive in the US. Accordingly, sales decreased and jobs were lost.

In other words, trying to solve the problem in the short term by restricting trade has turned into a big problem in the long term.

Even when a country is experiencing difficulties during the adjustment period, protectionism as an alternative simply worsens the situation.

8. The basic principles increase the economic efficiency of the system and contribute to cost reduction

Many of the advantages of the trading system are quite difficult to imagine in numbers, but this does not detract from their merits. They follow from the key principles of the system, simplifying life for both entrepreneurs directly involved in trade and producers of goods and services.

Discrimination makes it difficult to trade

Trade allows countries to implement the division of labor, as well as to use production resources more intelligently and efficiently. As for the WTO trading system, it offers even more significant advantages. Thanks to the important principles underlying the system, it helps to further increase efficiency and reduce costs.

The principle of non-discrimination is one of the key principles of the WTO trading system. In addition to it , there are a number of others:

  • transparency (policies, norms and rules);
  • growing confidence in the terms of trade (commitments to reduce trade barriers and expand access of other countries to their markets have effective legal force);
  • simplification and standardization of customs procedures, elimination of bureaucracy, centralized databases, as well as other measures aimed at "trade facilitation".

Together, these factors not only facilitate trade procedures, but also reduce the costs of companies and stimulate a sense of confidence in the future. This, in turn, also means creating more jobs and improving the quality of goods and services.

9. The system helps governments in the fight against lobbying

The GATT-WTO system formed in the second half of the 20th century helps governments to find a more balanced approach in the field of trade policy. Governments have a set of stronger arguments in the fight against lobbyists of all stripes, allowing them to focus on compromises in the interests of all participants in the economic processes in the country.

One of the lessons of the protectionist policy that dominated in the first decades of the 20th century is the damage that was caused as a result of the fact that narrow-industry interests managed to gain an unbalanced share of political influence. This further tightened the restrictive policy, which turned into a trade war that had no winners, but only losers.

At first glance, restricting imports looks like an effective way to support the economic sector. But this means an economic imbalance in relation to other sectors that should not suffer. For example, if you are trying to protect your light industry, then everyone else has to pay for more expensive clothes, and this puts pressure on wages in all sectors.

An escalation of protectionism is possible as other countries respond by raising their trade barriers. This is exactly what happened in the 1920s and 30s, leading to disastrous consequences. In the end, everything turned into losses even for those sectors against which protectionist measures were taken.

Governments should be able to resist the pressure of individual groups lobbying for their narrow interests, and the WTO system can help in this.

The GATT-WTO system covers a wide range of industries. Therefore, if during the GATT-WTO trade negotiations some group actively lobbies its interests, demanding that the government grant them special rights, then the government may reject this, citing the need for a large-scale agreement in the interests of all sectors of the economy. Governments regularly resort to this option.

10. The system encourages effective management

According to WTO rules, once a commitment to liberalize the trade sector is made, it becomes almost impossible to reverse it. The rules also prevent a number of inappropriate policy decisions from being made. For businesses, this means greater certainty and clarity regarding the terms of trade. For the government, this can often mean an enviable consistency in these matters.

The existence of rules creates effective obstacles to corruption.

The Rules include obligations to prevent inappropriate political decisions from being made. The policy of protectionism, as we have already seen, in general seems to be just such an inadequate option because of the harm it causes both at the national and international levels.

Some of the types of trade barriers introduce an element of additional negativity, since they are associated with unlimited opportunities in terms of rampant corruption and other forms of inefficient management.

One example of this type of trade barriers that the WTO is trying to combat is, for example, a quota limiting the annual minimum or maximum volumes of imports or exports.

By limiting the volume of supplies, quotas artificially raise prices, creating abnormally large profits (economists talk about "quota rent"). This profit, settling in the pockets of lobbyists, can be used to influence the political market.

It can also become a breeding ground for corruption, for example, in the distribution of quotas among traders. There are many examples of this all over the world.

In other words, quotas are an absolutely inadequate tool from the point of view of restricting trade. Governments have agreed under WTO rules that their use should not be encouraged.

Nevertheless, quotas of various types continue to be used in most countries, and governments claim that they simply need them. However, they are under the control of WTO agreements, and there are a number of agreements to reduce or eliminate many of them, in particular, it concerns the textile industry.

WTO agreements deal with a number of other areas, which can also help in the fight against corruption and inefficient management methods.

Transparency (for example, making all information about trade rules available to the public), other aspects of "liberalizing the terms of trade", clearer criteria for rules on product safety and standardization, as well as non-discrimination can help in eliminating "loopholes" for arbitrary decisions and fraud.

Quite often, governments resort to the WTO as one of the options for a positive external constraint on their own policies: "we cannot do this because it violates the WTO agreements."


Ten myths about the WTO

1. The WTO dictates policy

The WTO does not dictate policy to the Governments of its member States; on the contrary, the members of the Organization independently form the policy of the organization.

The rules of the WTO system are agreements developed as a result of negotiations between the governments of the member states, ratified by their parliaments, and decisions within the WTO, in almost all cases, are made on the basis of consensus of all members during negotiations in an atmosphere of accountability and democracy.

The WTO can use its influence only in the event of a violation by a State of its obligations, the occurrence of a trade dispute and its submission to the Dispute Resolution Body consisting of representatives of all Member States, which decides on it by approving the conclusions made by the expert group on dispute resolution, or the outcome of the appeal. This decision represents a private judgment as to whether the Government has violated any of the WTO agreements. If a WTO member who has violated obligations does not intend to correct the situation, he may face a backlash from the Organization.

As for the role of the Secretariat, it does not participate in decision-making, but only provides administrative and technical support to the WTO and its members.

Thus, the WTO does not dictate policy to its member States; on the contrary, its participants themselves form the policy of the organization.

2. The WTO does NOT advocate free trade at any cost

In fact, it is a question of what concessions countries are ready to make during trade negotiations, what they are ready to request and offer.

Yes, one of the principles of the WTO system is the reduction of trade barriers and trade liberalization. Ultimately, countries benefit from increased trade by reducing trade barriers.

But the "height" of these barriers should be determined by the countries in negotiations among themselves. Their position in the negotiations depends on how much they are willing to lower barriers, as well as what they want to get in return. The obligation of one country becomes the right of another country, and vice versa.

The WTO is a forum for negotiating liberalization. The Organization also provides a set of rules necessary for liberalization.

The rules defined in the agreements allow for a gradual reduction of barriers, which gives domestic producers the time necessary to adapt.

Special provisions are also provided for developing countries. In addition, they provide WTO members with the opportunity to apply restrictive measures against imports at unreasonably low subsidized or dumping prices in defense of domestic producers, thus acting in support of the principle of fair trade.

No less, and sometimes more important than the principle of free trade, are other principles of the WTO system. For example: the principle of non-discrimination, as well as confidence that the conditions for trade are stable, predictable and transparent.

3. Commercial interests take priority over development

The WTO does NOT put commercial interests above development interests

Free trade promotes economic growth and supports development, and is also the cornerstone of the WTO trading system.

At the same time, the question of whether developing countries benefit sufficiently from the WTO system is the subject of ongoing debate.

WTO agreements include many important provisions that take into account the interests of developing countries. For example, a longer period of time is provided for them to make changes in accordance with WTO rules. A special approach is provided for the least developed countries, including exceptions to many provisions of the agreements.

The need to address development issues can also be used to justify actions that are usually prohibited by WTO agreements, for example, the provision of certain government subsidies.

4. Commercial interests in the WTO are more important than environmental protection

This is NOT the case, in many provisions special attention is paid to environmental protection issues.

The preamble of the Marrakesh Agreement, which established the World Trade Organization, provides, among other things, for the optimal use of world resources, development support and environmental protection.

In the so-called umbrella provisions, for example, article 20 of the General Agreement on Tariffs and Trade "does not prevent any Contracting Party from taking or applying measures necessary to protect human life or health, animals and plants"; as well as "conservation of depleted natural resources".

Subsidies are allowed to protect the environment. Special attention is paid to the tasks of environmental protection in the WTO agreements concerning product standards, food safety, protection of intellectual property rights, etc.

In addition, the rules of the WTO system can help countries allocate rare resources more efficiently. For example, the reduction of industrial and agricultural subsidies, which was achieved as a result of negotiations, will reduce wasteful overproduction.

"WTO members can, should and are already taking measures to protect endangered species, as well as in other areas of environmental protection," says the report on the decision taken on one of the disputes submitted to the WTO concerning the import of shrimp and the protection of sea turtles. Another ruling leaves in place a ban on the use of asbestos on the grounds that WTO agreements prioritize health and safety over trade.

It is important, however, that the measures taken to protect the environment are not unfair and discriminatory. One cannot be lenient towards one's own producers and at the same time be strict towards foreign goods and services, just as one cannot discriminate against various trading partners.

The establishment of international norms and rules for the protection of the environment is the prerogative of specialized international environmental bodies and conventions, not the WTO. However, until now, WTO documents and international agreements on environmental protection have not come into conflict with each other, on the contrary, there are partial overlaps in them (for example, in agreements on import restrictions, etc.)

5. Commercial interests in the WTO have high priority over health and safety

Commercial interests do NOT prevail over human health and safety issues

Key provisions of the WTO agreements, such as Article 20 of the GATT, allow governments to take actions to protect the life and health of people, animals or plants. But these actions are regulated in a certain way to prevent the use of safety standards and regulations as an excuse to protect domestic producers and discriminate against foreign goods and services, "disguised" protectionism.

A number of agreements address the issues of standards for food products, the quality and safety of food and other products of animal and plant origin. Their goal is to protect the rights of Governments to ensure the safety of their citizens.

To do this, the measures applied should be based on scientific facts or standards recognized worldwide, for example, the Codex Alimentarius norms, which establish the recommended level of food safety standards within the Food and Agriculture Organization of the United Nations and the World Health Organization.

Governments, however, can also set their own standards, provided that they are compatible with international requirements and are not arbitrary or discriminatory.

6. WTO deprives people of jobs and widens the gap between rich and poor

The World Trade Organization does NOT hinder job creation and does NOT contribute to widening the gap between the poor and the rich

This accusation is incorrect, plus it unnecessarily simplifies the facts. While promoting economic growth, trade is also a powerful lever for creating jobs and reducing poverty. However, the situation is almost always complicated by the fact that a certain period of adaptation is needed to solve the problems of job losses. Protectionism as an alternative is absolutely not a viable solution.

The greatest employment benefit from free trade comes from a country that lowers its own trade barriers. Countries implementingexportin this country, especially the industries working for export, in which the situation is more stable and wages are higher, also benefit.

With the reduction of trade barriers, producers who were previously protected face tougher competition, and the effectiveness of their adaptation to new conditions becomes vital. Countries with more flexible adaptation mechanisms are in a better position than those that miss out on new opportunities opened up by trade and economic development.

The problem of adaptation of producers to the conditions of free trade is solved in the WTO in several ways. Thus, the liberalization of markets is carried out gradually, which gives countries time for the necessary adaptation. The agreements also allow countries to take restrictive measures against imports that cause particular harm to the domestic economy, but it is recommended to do this according to strictly defined rules.

In addition, liberalization within the WTO is conducted through negotiations. When countries feel that certain changes to existing protections are unacceptable, they may continue to resist demands to open up the relevant sectors of their markets.

In addition, there are many factors unrelated to the activities of the WTO that affect changes in the level of wages.

Why, for example, is the gap between the wages of skilled and unskilled workers increasing in developed countries? According to the OECD, most of the changes in wages in developed countries are explained by technological changes related to qualifications, while imports from low-wage countries explain only 10-20% of these changes.

Protectionism as an alternative to trade in order to save jobs is ineffective, since it increases the costs associated with output and generates low productivity. Thus, according to the OECD calculations, the introduction of a 30% duty on imports from developing countries actually reduces the wages of unskilled workers in the United States by 1% and the wages of skilled workers by 5%. In other words, by applying protectionist measures, the country thereby reduces the internal level of wages.

In addition, the analysis of exclusively commodity imports distorts the overall picture. In developed countries, 70% of economic activity is services, where foreign competition affects jobs in a different way. For example, when a telecommunications company opens a business in a country, in most cases it hires local staff.

Finally, although the standard of living is 1.5 billion. man is still extremely low, trade liberalization since the end of World War II has contributed to the fact that about 3 billion people were able to escape from the shackles of poverty.

7. Small countries are powerless in the WTO

Small countries are NOT powerless in the WTO

This is not true. In recent years, developing countries have taken a much more active position in the WTO negotiations, putting forward an unprecedented number of proposals in the negotiations on agriculture and actively engaging in ministerial statements and decisions. These facts are additional evidence of their trust in the system as a whole.

For example, the Uruguay Round (1986-94) became possible only because the industrial countries agreed to carry out reforms in the field of trade in textile products and agriculture, and both of these industries were vital for developing countries.

In the WTO trading system, everyone adheres to the same rules, which significantly expands the negotiating capabilities of small countries.

Thus, within the framework of the WTO dispute resolution procedure, developing countries successfully challenged the actions taken by industrialized countries. Outside of this system, these countries would be powerless in their actions against more influential trading partners.

8. The WTO is a powerful lobbying tool

The WTO is NOT an instrument of a powerful lobby

On the contrary, the government can use WTO membership to resist lobbying of narrow interests by individual groups. During the negotiations, it is easier for him to resist the pressure of lobbyists, citing arguments indicating that there is a need to adopt a common package of measures in the interests of the country as a whole.

This opinion is also incorrect because such an approach is associated with a misconception about membership in the World Trade Organization. Business, non-governmental organizations and other lobbyist groups do not participate in the WTO, except for special events such as seminars and symposiums. They can influence WTO decisions only through their governments.

9. WTO leaves no choice for weak countries

Weaker countries have a choice, they are NOT forced to join the WTO

To be or not to be in the WTO is a voluntary choice of any country, and therefore at the moment both large and small states are negotiating.

The reasons that an increasing number of countries want to join this system are positive rather than negative; they are embedded in the key principles of the WTO, such as non-discrimination and transparency. By joining the WTO, even a small country automatically enjoys all the guaranteed benefits of membership.

An alternative to joining could be negotiations on bilateral agreements with each trading partner, but for this, governments will need more funds, which is a serious problem for small countries. In addition, their negotiating capabilities in bilateral negotiations are weaker than they could be in the framework of the WTO, where small countries form alliances with other states with which they have common interests.

10. The WTO is an undemocratic organization

WTO is a democratic organization

This is not true. Decisions in the WTO are usually made on the basis of consensus, which is even more democratic than making decisions by majority vote. The adopted agreements are ratified by the parliaments of the Member States.

Despite the fact that not every country has the same negotiating capabilities, the consensus rule means that each member of the organization has a voice and a decision is made only when there are no dissenters.

Thus, the WTO mechanism provides equal opportunities for the Governments of all member States.