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What are Trade Organizations?

The World Trade Organization is headquartered in Geneva, Switzerland.
Trade organizations work to streamline exporting and importing among countries.
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  • Written By: Adam Hill
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 December 2014
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Trade organizations are voluntary associations between countries, formed with the purpose of liberalizing or opening trade between those countries. The member nations in trade organizations may, for example, agree to allow each other's products into their markets, without those products being subject to tariffs or other trade barriers. This is done with the intention of providing economic benefit to all countries involved.

There are many formal and informal trade organizations between the world’s countries, but the most well-known of those is the World Trade Organization (WTO). The WTO was founded on 1 January 1995 as the successor to the General Agreement on Tariffs and Trade (GATT). The WTO has as member nations, most of the countries in the world, including all of North America and South America, most of sub-Saharan Africa, Southeast Asia, the south Pacific, Australia, and Europe. This represents more than 95% of total world trade.

The purpose of the WTO is to supervise and liberalize international trade. It is headquartered in Geneva, Switzerland, and is governed by a Ministerial Conference which meets every two years. Essentially, the WTO serves as a place for member governments to go, to sort out trade problems they may be facing with each other, with a primary emphasis on negotiation. It also operates a system of trade rules which its member nations agree to abide by.

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Another of the more well-known trade organizations is the North American Free Trade Agreement (NAFTA). NAFTA is a trade agreement between the United States, Canada, and Mexico. The agreements were signed on 8 December 1993. Both the positive and negative effects of NAFTA have been studied and quantified by economists. Some argue in favor of NAFTA, saying that Mexico has seen its poverty rates fall, and real income levels rise. Others argue that business owners and the rich in all three countries have benefited, but Mexican farmers have been negatively impacted by falling food prices, and some U.S. workers in manufacturing and assembly have lost their jobs.

Numerous other trade organizations and agreements exist between countries all over the world. One example is the Japan External Trade Organization (JETRO). This is a government-related organization which was founded in 1958 to promote trade between Japan and the rest of the world. JETRO’s focus for the 21st century has been shifted from promoting Japanese exports, to encouraging foreign investment in Japan, to help Japanese firms to reach their maximum export potential worldwide.

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serenesurface
Post 3

I think that the World Trade Organization does an excellent job. They really do encourage free trade. They also help countries solve their problems with tariff policies by acting as an intermediary between them.

Of course, free trade is also in the interest of countries. If it wasn't, they wouldn't voluntarily become members of trade organizations and follow rules. Trade benefits everyone and that's why we need trade and also trade organizations for conflict resolution and also for a set of common procedures and regulations for countries to follow.

SarahGen
Post 2

@candyquilt-- But true free trade in every sense of the word isn't really possible. Countries also have responsibilities towards domestic businesses. Governments want to protect the interests of national businesses while also benefiting from trade. So while a government can have free trade with some countries, it can't do this with every country out there. It would not be beneficial in the long run as domestic businesses would lose out greatly to competition. Governments have to impose some tariffs on imports to maintain lower prices for domestic goods which keep domestic businesses afloat.

candyquilt
Post 1

Most countries in the world may be members to the WTO but no country has free trade agreements with all countries. Most countries have agreements with only a few other select nations. So it seems to me that free trade isn't really becoming a reality. Tariffs, quotas and other barriers to trade are still very prevalent.

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