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International body that governs trade between countries is called the World Trade Organization (Bossche, 2013). The Marrakesh Agreement, which 123 countries signed in 1994, was the catalyst for its start in 1995. The General Agreement on Tariffs and Trade of 1948 was replaced by the Marrakesh Agreement since it was not designed to address the emerging patterns of international trade. The International Trade Organization was an attempt to establish a comparable organization in the past, but it was never successful since a number of nations did not approve the treaty. The World Trade Organization was eventually established during the Uruguay Round in 1986, one of the largest trade negotiations.
WTO regulates trade between states by providing conclusive frameworks for the process of negotiating trade agreements as well as dispute resolution mechanisms to ensure full adherence to the agreements by signing states (Bossche, 2013). Some of the main benefits of being a member of WTO are first, the Most Favored Nation status acquired by every member state. It dictates that there would be no preferential trade advantage conferred by a member state to another because all states ought to treat each other equally. Second, member States enjoy lower trade tariffs, minimal regulations and import quotas amongst each other. This enables states to access large market for their products, more jobs, greater sales, and economic growth.
Developing countries majorly experience the disadvantages of being a member of WTO. They are highly dependent on powerful nations and are usually in a vulnerable position whereby they can be exploited easily by stronger states. Poorer member States are equally disadvantaged concerning dispute resolution since they are unable to funds their permanent delegations and therefore lacking a forum to table their issues. Free trade and restricted tariffs also affect developing countries with infant industries since they are unable to diversify and grow their industries quickly.
Dispute resolution is tasked to the Dispute Settlement Body that consists of all member states. It establishes a panel of experts to hear and determine to dispute and ensures that rulings are implemented through close monitoring. The process involves negotiations between the conflicting states, mediation by the director general, the creation of a panel, and finally the hearing (Bossche, 2013). In 2010, the US requested consultations with the WTO complaining about Philippines’ taxation of imported distilled spirits (Bossche, 2013). The US was of the view that it was discriminatory since domestic spirits were taxed substantially lower. Further, that these measures of taxation were inconsistent with the treaty. The WTO panel established by the Dispute Settlement Body found that the tax measures adopted by the Philippines were discriminatory and in violation of the provisions of the treaty.
In my opinion, the findings by WTO were equitable and fair since they would be effective in maintaining global economic stability and equal treatment of member states. The findings were also mutually acceptable, evidenced by an amendment of Philippine taxation laws in 2012 with an aim of adopting the findings and recommendations. Most importantly, the dispute was resolved peacefully without any recourse to war, therefore, maintaining peace and stability among member states.
Bossche, & P. (2013). The law and policy of the World Trade Organization: Text, cases, and materials. Cambridge: Cambridge University Press.
World Trade Organization, & World Trade Organization. (1995). Trading into the future: WTO, the World Trade Organization. Geneva: The Organization.
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