Advantages and Role of WTO in International Trade

Introduction, Advantages and role of WTO in international Trade? Exchange of products, goods, and services across the International borders is known as International Trade. It allows one country to expand their markets for goods and services. International trade makes the goods and services competitive in global markets.

It is complex process to do the business internationally as compare to domestic business. There are various factors like Currency, Government Policies, Economy, Laws influence affects the International trade. International trade significant shares in GDP of the country.

When the goods sold to a buyer from A country to B country in country A selling of this process is known as Import and in country B the process of buying the goods is known as Import. The Process of Import export is known as International Trade.         

Advantages of International Trade:

Availability of all types of Products and Services:

1) International trade gives the consumer and country range of the various products and the new markets.

2) Almost all the types of products found in international markets.

3) Goods includes food, clothes, spare parts, Jewellery, oil, stocks, water, currency  and services includes – 

4) Tourism, banking, consulting, transportation etc, For Globalisation international trade needs to be increased, without International trade the goods and services capital goods would be limited to within the body of 5) 

5) originating country. International trade is more costly than the domestic sale.    

• Competition

International Trade increases the competition level to sell the goods and services from different countries which in turn give rise to increase the quality of the products and supplier make sure to meet the international level of quality and price of the goods and services.

• Technology Transfer through International Trade

This is the best way to transfer Technology from a developed nation to developing nation through export- import process.

• Job creation in country

It create job opportunities in both the countries and better contribution in international trade can make reduce the unemployment in the country like there are very less unemployment in the countries – US, Japan, Korea etc.

• Government give incentive to the exporters to promote the export in a country

Exporters get the benefits on the exports, in India goods exporters get the benefits under MEIS Scheme and service exporters get the benefits under

SEIS Scheme in the form of license which can be used in the payment of duty.

WTO (World Trade Organization):

The WTO (World Trade Organizations) is the international organization for to simplify the import export process between countries. The objective of setting these international organizations to work for facilitation and growth of International trade,      

The World trade organization (WTO) was formed on 1st January 1995 and its headquarter is in Geneva Switzerland.

WTO Principles of trading

• Non-Discrimination

• Reciprocity

• Binding and enforceable commitments

• Transparency

• Safety Value

 In WTO the highest authority is known as Ministerial conference, which meets in every 2 years.

There are three bodies which handles all the daily work – 

• The General Council

• The Dispute Settlement body

• The trade policy review body

The WTO is a rules based member driven organization which means all the decision made after the Members discussion. Rules are the final result of negotiations and discussion among the members. The WTO boost the exports.

Types of International Trade:

International trade has three types – Export trade, Import trade, Entrepot trade. 

Indian Government approved the RoDTEP scheme which will replace existing MEIS Scheme in a phased manner.

International trade – Disadvantages:

• Over Dependency in other countries

The Unfavorable event in one country may impact the demand of products or job losses in other country.

• Not the right choice for the New company or startup

For startup and new company it is quite difficult to setup international trade as they don’t have much experience and resources. 

• National Security – Threat

Depending on the other country for import, sometimes exporters are taking decision which is not be in the international interest.

• Pressure on Resources of country

Country involved into international trade have pressure on the resources available to it’s own people. These resources are limited and it could drain more quickly.

We saw the advantages and disadvantages of International Trade but still it has become a necessity and country should maintain the balance between It’s Import- Export for the growth of country.