Course work

^{Advantage and disadvantage of WTO membership}

^{(By the example of Republic of Tajikistan)}

^{Table of contents}

           ^Introduction

1. ^{The role of WTO in International Business organization}
2. ^{Advantage and disadvantage of WTO membership}
3. ^{Brief evaluation of economic development of Republic of Tajikistan as a member of WTO}

 

^Introduction

     ^{When choosing a theme for the course, I tried to pick one that would be most interesting to me, and one that reveals the issues that are important to our economy. And I chose. I think this topic is very interesting, since our country is new. Our republic is just beginning to take the first steps into the market economy, is faced with its laws. For a long time we have there a command economy. On concepts such as competition, monopoly, natural monopoly is not paying attention, because monopolies are, one might say, to what was then the economy.  Issues related to development of the World Trade Organization (WTO), which is distinctive with its leading role and activity in increasingly economic globalization, as well as new accession in this context are considered a subject at issue that involves and concerns not only investigators, but also economic analysts in research and practical debates at different levels. Since the WTO, by making significant contributions to international trade liberalization, promotes the efficient administration of trade turnover and provides openness of member countries in foreign trade regimes through free market access principles. The WTO is the only international organization dealing with the global rules of trade between nations. It plays a role of administering transnational trade relations based on the multilateral trading system — the WTO's agreements, negotiated and signed by a large majority of the world are trading nations. The WTO's overriding objective is to maximize international trade liberalization and to establish it sound foundation, thus leading to economic development and advance in the cost of living. In order to achieve these undertakings, WTO's primary duty extends to administering commercial and economic relations among member governments according to the Package of Agreements resulting from the Uruguay Round trade talks (1986-1994). The WTO's overriding objective is to help trade flow smoothly, freely, fairly and predictably.}

^{It does this by:}

^{• Establishing “the most favorable regime” policy (establishment of an equal trade environment for member governments)}

^{• Establishing a “national regime” policy (inadmissibility of discrimination between imports and services with local goods);}

^{• Providing advantage over tariff methods in trade controls;}

^{• Lowering trade barriers to quantity;}

^{• Achieving openness and transparency in trade policy;}

^{• Maintaining internal markets under WTO rules only;}

^{• Creating favorable conditions for free competition;}

^{• Settling trade disputes through negotiations, etc.}

^{The World Trade Organization came into being in 1995. One of the youngest of the international}

^{Organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT)}

^{Established in the wake of the Second World War. By latest estimates, the World Trade}

^{Organization covers more than 95% of world trade in banking, insurance, securities and financial}

^{information.  Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. A majority vote is also possible but it has never been used in the WTO. Although debates on goods, services, and intellectual properties and exemption from liabilities are accepted by a three-fourths majority, a two-thirds majority is needed for new membership, as well as timely corrections to members' rights and duties. Virtually in this case priority is given to consensus. Article XII of the Marrakesh Agreement Establishing the World Trade Organization, which provides for the accession states:}

^{"Any State or separate customs territory has full autonomy in the conduct of its external commercial relations and other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to the WTO on terms agreed between the State or separate customs territory and the members of the WTO. "The phrase "subject to conditions to be agreed upon" requires that the process of joining a series of negotiations between the applicants and the members of the WTO. Typically, aspiring to become members of the first observer’s status is intended to allow the government to review the requirements and the process of joining the WTO. Observers do not need to make any changes or obligations and are entitled to attend meetings and review documents WTO. How do they develop familiarity with the WTO, they can begin to unilaterally change the mode of foreign trade in anticipation of the accession process. Governments then request to accede to the WTO by submitting a communication to the director-general, which is then circulated among all members. Upon approval of the request at the next General Council meeting, a Working Party will be established to review the application. Any and all WTO members may form the Working Party, although usually only those governments particularly interested in the accession of a given government will participate.}

Thus begins the "information gathering" stage of the accession process. The applicant provides a memorandum on its foreign trade regime describing all aspects of its trade policy that has a bearing on WTO Agreements. (3) The memorandum covers general economic indicators, policies affecting trade in goods, such as import and export regulations, agricultural and industrial policies, policies regarding intellectual property rights, policies affecting trade in services, customs valuation, and licensing requirements. The memorandum on the foreign trade regime is distributed among Working Party members, who in turn submit written questions and comments for response by the applicant. Based on this initial round, the Working Party will meet to further delve into the details of laws, regulations, sectoral policies, taxation systems, privatization plans, subsidy policies, information on regional trading agreements, tariff and non-tariff barriers and anything else that might affect international trade. Tajikistan is entering the final stage of its submission to achieve membership of the World Trade Organization (WTO). It has so far held eight rounds of negotiations on a bilateral basis with nations that have sought to discuss tariff and market access provisions for inclusion in its final accession package. The Working Party on the accession of Tajikistan was established by the General Council on 18 July 2001. Multilateral work is proceeding on the basis of a draft Working Party Report (latest revision circulated in February 2012). Bilateral market access negotiations are underway on the basis of revised offers in goods and services. The Working Party held its sixth meeting in July 2011 to continue the examination of Tajikistan’s foreign trade regime. As part of ongoing bilateral market access negotiations, the latest held in the week ending August 17, Tajikistan has agreed to lower tariffs on cooking equipment, refrigerators, ovens and water heaters in discussions to gain Thailand's backing. Earlier, the Tajikistan government confirmed that it had concluded negotiations with Japan, and had received support from the nation for its accession in an agreement signed on July 31, 2012. A total of seventeen of Tajikistan's 90 trading partners are interesting in negotiating terms bilaterally.

 

1. ^{The role of WTO in International Business organization}

^{International trade has been increasingly frequent since industrialization. Today globalization becomes well-known among people. As economies have become more open, countries become more dependent on one another. However, rarely is free trade truly free trade due to country interventions which aim to promote industrialization or national interests, or protect employment or consumer (Morrison 2006). In an interdependent world the actions of one country has consequences for others. Hence The World Trade Organization (WTO) has grown in importance because globalization expands and countries become inter-dependent. WTO is the international body responsible for oversight of trade between nations.}

^{Why is it important for business in the developing world to know about the WTO rules?}

^{There are two main reasons. First, in a globalizing economy, the WTO agreements determine more and more national trade rules. For business, it is vital to be familiar with the present and future trade rules in their markets. Just one example: the WTO Agreement on Textiles and Clothing sends a clear message that from 1 January 2005 such trade will be free of quotas. The new trading environment will provide definite advantages to more efficient producers, who will increase their market share at the expense of less efficient ones. Knowing what is in the Agreement will facilitate business decisions regarding investments, structural adjustments and export strategy. I could also have mentioned the examples of the WTO Agreement on Agriculture or the General Agreement on Trade in Services. And other reasons are: The other reason is more general but equally important. The history of trade negotiations shows that only a well-informed business community can provide a partnership for governments in international rule-making. In developed countries, business is routinely very active in influencing government positions in multilateral or bilateral trade negotiations. If a government of a developed country neglects substantial business interests, it may face serious difficulties in its parliament or elsewhere. In many developing countries and transition economies, there is no systematic dialogue between business and government in trade matters. This is partly due to historical reasons, such as weak economic structures and legal and institutional underdevelopment. But a contributing factor is that businesses in that part of the world do not know the rules of the game and therefore are not in a position to participate in a meaningful dialogue with the government. As a result, multilateral trading system rules are alien to them; businesses do not feel that they can have an impact on them, however small it may be. This strengthens the already widespread anti-globalization feelings. And then comes this kind of question what are the main concerns of business in developing countries right now about the world trading system and the WTO negotiations? As we have seen, it was not easy to agree on the Doha Development Agenda. Businesses in many developing countries were not satisfied with the results of the Uruguay Round. They felt that their governments went too far in liberalizing their domestic market. At the same time, their access to foreign markets in traditional export items — agricultural products, textile and clothing, not to mention labour — remained subject to serious restrictions. Greater liberalization led to strong competition in the domestic market which, in many cases, put domestic industries’ existence in danger. In addition, implementation of the Uruguay Round agreements was far from satisfactory. Developed countries have been slow in eliminating restrictions in textile and clothing, for example, while developing countries had difficulties in implementing obligations due to institutional problems and lack of a substantive dialogue between business and government during the Uruguay Round. Because some developing country governments failed to hold meaningful dialogue with the business community, they have accepted some obligations that are difficult to meet in the specified time frames. See the problems, for example, with regard to the Agreement on Trade-Related Investment Measures or the Agreement on Subsidies and Countervailing Measures. This explains why developing countries insisted on including so many development and technical assistance elements in the Doha Development Agenda. How can International Technology and Conservation help? ITC has developed programs to provide technical assistance to the business community in developing countries and transition economies in multilateral trading system-related matters. The World Trade Net program is the largest one in this category. Business interests drive the program, which operates only in countries where both the business community and the government are interested in participating. The World Trade Net is an informal network of major players in trade matters. Members include businesses, government, trade specialists, training institutions and universities. The main emphasis is on explaining to businesses the implications of the WTO agreements and promoting meaningful dialogue between business and government in trade matters. This is of special importance now.  The WTO's overriding objective is to help trade flow smoothly, freely, fairly and predictably, its central principle is the dispute settlement mechanism, a system that underscores the rule of law and is based on clearly defined rules and timetables for settling disputes. WTO members agree that they will use the multilateral system to settle their trade disputes instead of taking unilateral action. Reducing the scope for unilateral action is an important guarantee of fair trade for less powerful countries (Yin and McGee, 2001). WTO aims to achieve its goals by: Administering trade agreements}

^{* Acting as a forum for trade negotiations}

^{* Settling trade disputes}

^{* Reviewing national trade policies}

^{* Assisting developing countries in trade policy issues, through technical assistance and training programs.}

^{* Cooperating with other international organizations}

^{Therole of WTO is to facilitate international cooperation to open markets, provide a forum for future trade negotiations between members, and provide a forum for the settlement of trade disputes. The WTO has a stature equal to that of the International Monetary Fund or World Bank and will cooperate with those agencies on economic matters. The WTO's membership includes those countries that previously belonged to GATT and is now open to other countries, if their membership is accepted by two-thirds majority votes of the members. The WTO has 153 members representing 95% of the total world trade and the observers are seeking membership. Dispute settlement is what the WTO does best. Trade disputes are brought before the WTO at approximately three times the rate that had typically been handled by the GATT. In the past four years, the United States has been the greatest proponent of this system. Approximately 40 cases have been brought by the United States seeking compliance with trade agreements and market access. The United States has had a good deal of success in this forum, winning a large majority of its cases. U.S. trade advocates have gained market access in areas ranging from agriculture to information technologies. In contrast, the WTO's predecessor, the GATT, often derided as the ''Gentleman's Agreement to Talk and Talk,'' failed to resolve many disputes and lacked credibility as a mechanism for resolving trade disputes. Parties to a GATT dispute could simply reject and block acceptance of the panel report. The case could be reargued numerous times until the parties tired of it and an agreement was reached. The WTO is built on the GATT principles of open trades which include trade without discrimination, gradual transition through negotiations, predictability through transparency and binding agreements, promotion of fair competition and encouraging development and economic reform. The GATT reduces the propensity of national governments to put tariffs on physical goods to protect domestic companies, and other institutions are furthering this opening process. Thus, the Uruguay trade agreement was reached by 68 countries committing themselves to liberalizing markets in telecommunications. The WTO is negotiating for the removal of tariffs on other barriers on wide range of goods and services. It is also seeking a world agreement on rules governing foreign investment - both to encourage it and, where thought necessary, to control it. Regional groupings have grown in economic importance in recent years like the EU, NAFTA, ASEAN being examples. An alternative to seeking trade liberalisation through the WTO is for countries to enter into trade agreements within the regional grouping. However, regional trade groupings must be notified to the WTO. Trade agreements within regional groupings are by nature discriminatory. Countries may decide to make reciprocal tariff reductions in their trade with each other, with these concessions not necessarily being extended through other countries. In this context regional groupings can be classified as Free Trade Area, Custom Unions, Common Market, Economic Union and Political Union. It should also be noted that regional groupings are strengthening relations with each other (e.g. ASEAN & Latin American) and are signing inter-regional cooperation agreements. Thus, although the WTO has its goal of liberalizing trade between all nations, today the majority of trade agreements are bi-lateral. WTO claims that its predecessor GATT and the WTO itself have helped to create a strong and prosperous trading system contributing to unprecedented growth. According to WTO data, the world trade has experienced an exceptional growth during the past 50 years. Merchandise exports grew on average by 6% annually and total trade in 2000 was 22-times the level of 1950. Nevertheless, while the WTO role in world trade is obviously important, its contribution to world trade growth might be questioned. Particularly there is enormous controversy over the effectiveness and side effects of WTO regulations. Firstly, since the establishment of the WTO in 1995 the average annual number of international trade disputes has raised by more than 700 percent (Yin and McGee, 2001). Secondly, there is growing evidence that WTO has a limited ability to deal with rising conflict with developing economies and offer effective solutions to these disagreements. For example Kwa (2001) and Mottoo & Subramanian (2003) provide an extensive discussion of this issue. Finally, Rose (2003) undertook a comprehensive empirical study employing gravity models and came to conclusion that there is no strong empirical evidence that GATT/WTO has systematically played a strong role in encouraging trade. The next section discusses the mentioned above issues in detail. It seems that majority of economists recognize GATT's/WTO's contribution to liberalization and promotion of trade between countries. For instance, Bagwell and Staiger (1999) noted that the central role played by the GATT in shaping postwar trade policy is widely accepted. Krueger (1998) writes: "...the growth and liberalization of the international trading system has been the most prominent success of the postwar period ... the great liberalization of tariffs and trade in the post-war period was achieved under the auspices of the GATT ..." Furthermore, according to Bagwell and Staiger (1999) GATT has strong theoretical underpinnings for success in promotion of trade. Bagwell and Staiger (1999) employed general equilibrium trade model and came to conclusion that GATT's principle of reciprocity can be viewed as an effective mechanism for promoting trade. One of the underlying principles of WTO policy is agreement that WTO members will use the multilateral system to settle their trade disputes instead of taking unilateral action. Multilateral negotiations reduce the scope for unilateral action, which is an important guarantee of fair trade for less powerful countries. Nevertheless, Bagwell and Staiger (1999) stress that countries can implement efficient trade agreements only if they also abide the principle of non-discrimination. The recent developments show that there is growing number of disputes between the countries; majority of them directly concerned with polices that considered to give advantage to one country at the expense of the others. Yin and McGee (2001) notes that during the 47-year existence of the GATT, there were altogether 236 dispute cases reported to GATT - an average of 5 cases per year. In contrast, there were 220 cases filed during the first six years of the WTO - seven times the annual average reported to GATT. It is reasonable to expect, that growing number of conflicts will eventually result in decrease of WTO operation efficiency, since it becomes increasingly more difficult to find a solution that meets requirements of all parties. Therefore, the surge in trade disputes raises concerns about the WTO's ability to police world trade and to settle down conflicts. Nevertheless, Yin and Mc Gee (2001) argue that trade volumes, trade imbalances, trade dependence, and tariffs and non-tariff barriers are the main factors in disputes. In addition, countries with large trade volume, large trade imbalances, high trade dependence, or that have more measures protecting their market are more likely to be embattled in trade disputes than other countries. Consequently, growing conflicts between the countries might be naturally related to increase in trade activities. While USA is accounted to be involved into majority of conflicts, role of the developing countered in WTO becomes increasingly important. According to Mattoo and Subramanian (2004) there are several challenges in accommodating developing countries in WTO. First small countries do not have much to offer to as trading partners; their opportunities to benefit from engagement into WTO the operations are quite limited. Second, the interests of these countries are only imperfectly aligned with liberalization of the multilateral trading system. Since, developing preferential access to the markets of the industrial countries, further liberalization of the trade and reduction of tariffs and barriers does not necessary increase access to these markets. The developing countries disputes are complicated by several factors. First of all, it is very difficult to measure effects the trade policies. Rose (2002) employed over sixty measures of trade policy and has been unable to find convincing evidence that membership in the multilateral trade system is associated with more liberal trade policy. While he acknowledges that that members of the system usually enjoy slightly more economic freedom using the Heritage Foundation's index. Secondly, there is ongoing debate among academics on the effect of free trade on economy growth. Easterly (2002) provides an extensive overview of this topic, he presents theoretical argumentations on both sides of free trade debate. According to Easterly(2002), those opposed to free trade argue that since the price of primary commodities tends to decrease over the long run, countries should put up barriers to manufactured imports and thus stimulate the development of their own industries. Free trade opponents believe in the "infant industry" argumentation, which stresses that there is a learning curve to developing industry and allowing manufactured imports would decrease chances of domestic industry to compete fairly. Supporters of free trade believe that economies should focus on the specialization of their production. It allows countries to export products, which can produce more efficiently and import other products they are not good at producing. Finally, trade barriers distort prices which lead to inefficient allocation of the resources. While there are several empirical studies that support the link between openness and economic growth, a comprehensive study by Rodriguez and Rodrik (2000) discredits majority of them. Rodriguez and Rodrik (2000) show that "the indicators of 'openness' used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance" and often, "the methods used to ascertain the link between trade policy and growth have serious shortcomings." Furthermore Rodriguez et al (2000) argued that authors in this literature have used inappropriate indicators of trade policy, the selection of indicators was biased, and therefore the results tent to show statistically significant relationship between trade liberalization and growth. Another controversial argument is historical evidence. Rosenberg (2002) notes that United States, Germany, France, and Japan all became wealthy and powerful nations behind the barriers of protectionism, while South Korea and other East Asian countries successfully used trade barriers to create export industries and built local know-how. Furthermore, Weisbrot, Naiman, and Kim (2000) show that "eighty-nine countries experienced decrease in per capita rate of growth by at least five percentage points from the period 1960-1980 to the period 1980-2000, the latter period is widely referred as the area of globalization. For example, Dollar and Kraay (2002), argue that globalization which started in 1980 has helped to promote economic equality and reduced poverty. Considering complexity of the problem, it is reasonable to conclude that free trade does not necessary lead to economic growth and countries are not likely to benefit equally from reduction of the trade barriers. Supporters of more liberal world trade argue that it brings access to markets and cheaper goods and services. The growth in trade that follows benefits both consumers and workers by encouraging innovation and investment. Others take much more critical view, pointing out that move towards liberalization through bodies such as WTO is driven by rich countries. They believe the agreements reached serve the interest of multinational businesses and richer economies rather than indigenous producers in local economies. Therefore, further globalization of trade is likely to bring up new conflicts, as the trade volumes grow regulation of disputes becomes increasingly complicated, which is reflected in the collapse of the negotiations in Cancun 2003 and tense negotiations in Hong Kong 2005. Finally, one of the most important questions is whether WTO is actually somehow related to the increase in the world trade. Rose (2003) stressed that GATT/WTO is not associated with substantially enhanced trade, once standard factors have been taken into account. Rose (2003) conclusion is based on analysis of gravity model, which is recognized by many practitioners as a useful tool for analysis of international trade. Rose (2003) give two possible explanations for GATT/WTO failure to promote trade. First is that GATT/WTO has not typically forced most countries to lower trade barriers, especially developing countries that have received "special and differential treatment. The second reason is that members of the WTO seem to extend most favored nation status unilaterally to countries outside the system, even though they did not have formal rights to do it. At the same time, Rose (2003) acknowledges that his analysis is based on assessment of GATT policies, and since WTO has more wide-reaching framework to resolve disputes about trade in goods, services, and intellectual property its impact on trade will be more substantial. Nevertheless, the recent research on the topic by Subramanian and Wei (2003) brings up new perspective on the subjects, according to their findings Rose (2003) analysis is incomplete and can be misread seriously. This conclusion was based on two grounds first of all Subramanian and Wei (2003) stress that econometric methodology should be refined to incorporate the country fixed effects identified by Anderson and Wincoop (2003). Secondly the non-tariff barriers such as quantitative restrictions for the balance of payments should be taken into the account. Subramanian and Wei (2003) conclude that GATT/WTO has done a splendid job of promoting trade; membership in GATT/WTO is associated with 40% increase in imports for industrial countries. Nevertheless it is obvious that developing countries benefited to the far less extend. Developing countries in the context of trade are at the bottom of the value chain. Perhaps an exception being the recent developments in service industries - particularly concerning I.T. In general they export low-value, primary products (e.g. metals, agricultural produce), whilst the developed economies trade in high-value products. Although, the WTO promotes the ideal of a level playing field in trade, developing countries make the case that the world trade system is stacked against them. They make the point that GATT barely touched barriers to developed countries' markets in textiles and agricultural products, and challenge the WTO on protectionism. Developing countries make up more than 75% of the WTO membership, but the real muscle, as evident in many WTO adjudications, is exerted by the main trading nations/groupings (U.S., E.U., Japan). Discussion made above in context to issues with WTO is of prime importance but there could be few more issues in this context which cannot be neglected. Such as the issue of labor standards is one of the most controversial issues. The WTO is accused of casting blind eye exploitation of labor and of undermining efforts to protect the health and safety of the workers. Human Rights group and International Labor Organization (ILO) are pressing for action in form of multilateral agreements on labor standards. The debate at WTO is whether WTO is the right vehicle for enforcing labor standards, and what effect such action would have on the competitive advantage of labor-intensive industries. The WTO is now in discussions with ILO on enforcing the core labor standards. Another contentious issue for the WTO is that of environmental protection and trade policy. Several high profile cases on import bans for environmental reasons have been lost recently. The view held by many countries is that the WTO is not sufficiently sympathetic to the environmental issues. Those in favor of trade liberalization argue that environmental issues should be dealt with by proper labeling giving consumer the choice. As it follows from the above discussion, GATT/WTO played an important role in the world trade. Nevertheless, it is very difficult to evaluate the contribution of GATT/WTO to promotion of free trade in real numbers. Furthermore, it is important to stress that free trade does not ultimately leads to economic growth or creates value itself. Therefore, WTO attempts to manage highly sensitive issue, since countries are likely to promote free trade when they can somehow benefit from it and negotiate on tariffs and barriers whenever they aim to protect their own markets. Finding the right balance while accommodating WTO member's requests becomes increasingly difficult as the number of disputes continues to grow. Therefore, WTO success will largely depend on the ability to offer a flexible framework, which would be able to consider positions of different parties involved into negotiations.}

2. ^{Advantage and disadvantage of WTO membership}

     Membership in the WTO also has responsibilities. Members agree to avoid erecting trade barriers, instead abiding by the WTO's resolution of the dispute. This prevents the escalation of trade restrictions that could help the individual country temporarily, but hurt world trade overall. In fact, it was just this type of retaliatory trade warfare that worsened the Great Depression of 1929. As global trade slowed, countries sought to protect domestic industries. Trade barriers were erected, creating a downward spiral. As a result, global trade shrank by 25%. Members of the WTO know what the rules are, the penalties for breaking the rules, and how to play the global trade game. This certainty creates a safer trading arena for everyone. It also lowers the costs of doing business just by removing volatility. These general benefits extend to all members. Since the membership is so large, many of these benefits are also felt by the entire world. WTO membership means that the nation automatically receives the Most Favored Nation status. Basically, this means all 149 WTO members must treat each other the same. They give no preferential trade preference to any one partner without giving that preference to all. WTO members have lower trade barriers with each other. This includes tariffs, import quotas and excessive regulations. Lower trade barriers allow them a larger market for their goods, leading to greater sales, more jobs and faster economic growth. Over 75% of WTO members are developing countries. WTO membership allows them access to developed markets at the lower tariff rate. Membership allows them time to remove reciprocal tariffs in their own markets. This gives these countries an opportunity to catch up to sophisticated multinational corporations and their mature industries before opening the developing countries' markets to overwhelming competitive pressure.

    Continues to operate the inexorable law of economics: wealth and authority of any country with each passing day more and more dependent on its foreign trade, but perhaps the most effective way to improve trade ties - to join the World Trade Organization. Today, the WTO is the main international organization within which discuss and develop the main issues related to the regime of international trade in goods and services, the control over the observance of the law. Moreover, the development of the WTO in the first six years of operation clearly showed that the range of issues it expands and, obviously, in the years to be replenished with new challenging issues: environmental issues related to trade, foreign trade and the international movement of capital, foreign trade and exchange of advanced technology, international trade and competition policy, among others. Thus, the WTO is increasingly turning into a universal international organization to regulate all the processes of the international exchange of goods, capital, services, and labor. The basis of the organization WTO - is unique, multilateral contract. He is, at least, of the 56 major agreements (approximately 30,000 pages) and is the world's largest contract regulating trade virtually all types of goods services. Surrounding it, the state receives guarantees that its exports are not subject to any discrimination in the markets of other members in exchange for similar obligations. At present, the WTO is about 95% of world trade. A benefit of the WTO system proves not only the fact that almost all the major trading nations are now members. Apart from the purely economic benefits that are achieved by reducing barriers to the free exchange of goods, the system has a positive effect on the political and social situation in the Member States, as well as individual well-being of citizens. Benefits of the WTO trading system are manifested at all levels - individual citizen of the country and the world at large. WTO benefits to consumers:

The main advantage here is lowering the cost of living by reducing protectionist trade barriers.

- Lowering the cost of living;

The most obvious benefits of free trade to the consumer - is lowering the cost of living by reducing protectionist trade barriers. For 50 years the organization has been held eight rounds of talks, and currently trade barriers around the world are lower than they have ever been in the history of modern trade. Due to the reduction of trade barriers not only ready cheaper imported goods and services, but also domestic products, which are used in the production of imported components.

WTO system encourages competition and lowers trade barriers, resulting in consumers benefit. Thus, the major reform of trade in textiles and clothing in the WTO, which will be completed in 2005, includes the removal of restrictions on imports. - A wider choice of goods and services;

A wider choice of goods and services - as an undoubted advantage of the free trade system to the consumer. In addition to foreign finished products, and we are talking about domestic goods and services, which range expands due to lower prices of imported materials, parts and equipment layout. Import competition encourages the most efficient domestic production and thus indirectly reduces prices and improves the quality of products. In addition, as a result of greater exchange of goods are developing new technologies, as happened, for example, with mobile phones. The increase in exports of domestic products also increases incomes of producers, the tax revenue to the state and, therefore, the income and welfare of the general population. In addition to the benefits to consumers, there are also benefits of the WTO to the economy as a whole. So to the economic benefits include:

- Increasing revenues;

It is impossible to make a clear distinction between the effects of free trade on consumers, producers and the government. Thus, the reduction of trade barriers promotes trade, which leads to an increase both public and personal income. Empirical data indicate that the Uruguay Round as a result of the transition to a new system of global trade transactions revenue increased from 109 to 510 billion dollars. Single market in the European Union also contributed to increased income and wealth. Increase government revenue through activities successful exporters can redistribute received additional resources and help other companies facing foreign competition, increase productivity and expand production scale, improve their competitiveness, or switch to a new business.

 

- Increasing employment;

Development of trade in the long term leads to an increase in employment, particularly in export-oriented sectors of the economy. But in the short term, the loss of jobs as a result of competition from domestic companies import manufacturers is almost inevitable. Protectionism cannot solve this problem. On the contrary, increased trade barriers causes a decrease in production efficiency and the quality of domestic products, which is the restriction of imports leads to higher prices for it, and has a negative impact on sales, and ultimately on the job numbers.

- Increasing the efficiency of foreign economic activity:

Applying the principles of the WTO can improve the efficiency of foreign economic activity of the state is achieved, first of all, simplification of customs duties and other trade barriers. As a consequence, the predictability and transparency of the economy attract partners and increase turnover. Non-discriminatory approach, transparency, greater certainty in terms of trade and simplification - all this helps to reduce the costs of companies, streamlining their operations and create a favorable climate for trade and investment. In turn, the influx of capital into the country, in particular in the form of foreign direct investment, creates jobs and improves the well-being of the population as a whole. In addition to the economic benefits of freer trade, the state receives certain political benefits, they are:

- Protection from lobbying;

The government will have greater capacity to protect themselves from the actions of lobbyists, as trade policy is in the interest of the overall economy. State policy of protectionism for certain sectors implies a certain political influence of representatives of these spheres of production. In the first decades of the 20th century, strengthening policy trade restrictions led to a trade war, the winners of which were not, in fact, in the end, suffer from similar restrictions even sectors that require protection, slowing economic growth and general welfare falls. Accession to the WTO system helps to avoid such situations, because the state's policy is focused on the development of all sectors of the economy, rather than its individual parts, which helps to prevent distortion of the competitive environment.

- The fight against corruption:

The system of free trade as a prerequisite for sound policy decisions to combat corruption and bringing about positive changes in the legal system, which in the long run, an inflow of investments into the country. The use of some forms of non-tariff barriers, such as import quotas, inevitably entails a risk of corruption among officials distributing the quotas and thus obtain profits importing companies - so-called "Quota rent". [9] Now the WTO is working to reduce and eliminate many of the still-existing quotas, particularly in textiles. Transparency and disclosure, that ensuring the availability of all information on trade rules to the public, more precise criteria for rules covering safety and product standards, the application of the principle of non-discrimination also have a positive impact on the political situation, reducing the possibility of arbitrary decision-making and deception.