The WTO also mediates disputes between member countries over trade issues. When the government of one country accuses the government of another country of violating world trade rules, a WTO panel rules on the dispute. (The panel`s decision may be appealed to an Appellate Body.) If the WTO finds that the government of a member country has not complied with the agreements it has signed, the Member is required to change its policy and bring it into line with the rules. If the member finds it politically impossible to change its policy, it may offer other countries compensation in the form of lower trade barriers for other goods. If it chooses not to do so, other countries may obtain wto authorization to impose higher tariffs (i.e., `Retaliatory measures` on goods coming from the Member State concerned because they do not comply with it. This has three main effects on social well-being. Consumers are worse off because the excess consumption (green region) is decreasing. Producers are doing better because the producer`s surplus (yellow region) is growing. The government also has additional tax revenues (blue region). However, the loss to consumers is greater than the profits of producers and the government. The magnitude of this social loss is shown by the two pink triangles.
The abolition of tariffs and free trade would be a net gain for society. [20] [21] History has shown that free trade is rarely something that is agreed upon. A pattern has always been repeated: whenever a major world power emerges, it seeks to promote a trade policy that serves its own interests. This policy is then imposed on other parts of the world that want to exploit or integrate power. In times of general instability, each power usually enters into contracts to protect its domestic industries. Nowadays, powerful nations take a much more diplomatic approach than former empires when promoting their economic interests abroad, although the ability to use military power and intelligence remains indispensable. While the developed world rhetorically encourages developing countries to catch up, it has created a system of global competition. To a certain extent, this competition deprives it of the possibility of developing internally. It can therefore be argued that the era of free trade imperialism is not yet over and that it is at the heart of many of the problems facing the world today. After all, the vast majority of people living on this planet are still completely excluded from any decision-making regarding international trade policy.
Just as in the days of the Roman Empire, trade policy is made by a small number of people. It is in the nature of things that policymakers are more concerned with national interests than with the creation of a harmonious global economy. The future will show whether trade policy will continue to be a matter of power and domination, or whether the world can accept an economic system that benefits all peoples. Trade agreements will continue to play a key role in the recurrent issues of war and peace. However, these advantages must be offset by a disadvantage: by excluding certain countries, these agreements can shift the composition of trade from low-wage countries that are not parties to the agreement to high-cost countries that are. Although Britain mainly used diplomatic force to open foreign markets to its «free trade policy,» military power remained the main component that ensured the functioning of this system. The Empire was always ready to deploy its superior army if another nation opposed its foreign policy. A clever example of this was China, as its economy was fundamentally self-sufficient and there was simply no need for Western products. But his resistance to the opening of markets led to the Anglo-Chinese War (1839-42), which the British quickly won.
The Empire had access to five treaty ports and most-favoured-nation status, meaning that a trade framework was created in which no nation is more favoured than another on trade matters. Given the economic and military imbalances of the time, this policy ensured that Britain had a major influence on China`s trade policy. (7) In 1995, gatt became the World Trade Organisation (WTO), to which more than 140 Member States now belong. The WTO monitors four international trade agreements: GATT, the General Agreement on Trade in Services (GATS), and the Trade-Related Intellectual Property Rights and Investment Agreements (TRIPS and TRIMS, respectively). .
