Monday, 27 February 2017

The WTO and its current function

The WTO is not an organisation of trade deals, it provides an opportunity for participating countries to negotiate about trade regulation. Previously Japan and the US attacked that China had some issues violated the WTO requirement. However, I think that the importance of the WTO has been declining. There are already 164 member countries. Having too many members is not a good thing that it makes negotiation much more complicated and less effective. Moreover, member countries are not necessarily willing to form partnership with all the other members, as some of them do not share similar interests and some might be in conflicts with each other.

Whether or not to join the WTO is a move based on self-interests. Once a country joins the WTO, it is very difficult for other countries to withdraw this country from the organsiation. Therefore, some action that might violate the agreement happens is not a surprise. The large number of member countries make it extremely to monitor every single member's trade behavior.

Comparing the WTO with other organisations, it is not surprising to find that the larger an organsiation is, the less effective it will become. Trade deals are made much better between countries who with geographical similarities or with production differences. If countries produce similar products, they are unlikely to trade with each other, as they are competitors. If they are geographically close to each other, costs of trading are lowered by the geographical advantage.

Therefore, I think that in the future, a large world organisation will not be popular any more, regional partnership will become more and more popular.

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