International Business Practices

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International Business Practices

The World Trade Organization or WTO is the world organization mandated with the responsibility of liberalizing trade in the world between all states. The World Trade Organization was officially launched in the year 1995 because of the Marrakech Agreement, which was signed in Morocco, which was aimed at providing binding means of dispute resolution between countries with trade disagreements replacing the existent General Agreement on Tariffs and Trade (GATT). In essence, the organization provides countries in trade with frameworks for developing trade agreements and remedies for disagreements of such trade agreements.

Numerous benefits are accrued to members of this organization. The main benefits of belonging to this organization are surety in adherence of trade agreements between states. This is usually enforced by the presence of signed contracts by the official representatives of the states involved in trade. Trade agreements are also made public for members of the organization such that these members are able to undertake specialty trade contracts such as reduced tariffs in trade or entirely waived trade tariffs (World Trade Organization, 2004).

However, despite the claims of only benefits in terms of trade the organization poses as disadvantages to poorer countries in the organization. This because the overseers of this trade organization are rich countries which are edged on bargaining for trade agreements to their utmost benefit making poor countries vulnerable to legal exploitation by these rich countries. Such exploitation might eventually leads to the presence of trade disputes because of the presence of exploitation by these rich countries.

Trade dispute settlement by the organization is provided by the agreement, which was signed by the members in the year 1994 which was derived from the GAAT Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) clause that was later revised under the Marrakesh Agreement in 1995. The members are under agreement tot ensure that members who are believed to have violated rules of trade embedded in the organizational constitution should face necessary action via the use of action based on Multilateral systems as opposed to the use of unilateral means implemented by the individual countries.

Recent trade disagreements between the United States and the European Union are an illustration of stakes when countries enter into agreements. The controversy arose from the presence of the United States Farm Bill, the imposition of tariffs on United States steel imports from the European Union and the inclusion of anti-terrorism control protocols to include checks at certain ports within the European Union. This led to the biggest disagreements s both parts of the Atlantic are equally great in terms of economic might. There were rulings by the WTO inhibiting the European Union from disallowing the entry of United States beef, which is claimed to have hormone treatment to enhance growth (EurActiv.com PLC, 2002).

In addition, the WTO also bestowed remedies in terms of cash to the European Union on a trade dispute between the two states. This emanated from the issue of tax breaks issued by Foreign Sales Corporation (FSC) Law issued to companies in the United States with specific reference to those involved in the export business. This dispute was settled fairly in the presence of the WTO who facilitated the issue of the awards for damages to the European Union for the contravened trade agreements by the United States.

I think the issue was settled amicably as both partners are equally large players in the trading market. Hence, there was no bias in the settlement between the United States and the European Union. In addition the issue could only have been settled by the WTO; hence they WTO was prompted to ensure sufficient and equivocal settlement and adherence to the statutes of the trade agreement by ensuring that they were adhered to by both partners but was contravened by the united states in order to encourage more exports to the united states.

References

Barfield, C. E. (2001). Free trade, sovereignty, democracy: The future of the World Trade Organization.Washington, D.C: AEI Press.

EurActiv.com PLC. (26 July 2002). EU-US Economic Disputes: There is More to Trade than Goods and Services. Retrieved from http://www.euractiv.com/trade/eu-us-economic-disputes-trade-goods-services/article-116971 on 8 June 2012.

World Trade Organization. (2004). A handbook on the WTO dispute settlement system. Cambridge, UK: Cambridge Univeristy Press.