The World Trade Organization (WTO) is the only global international organization dealing with the

rules of trade between nations.

The Theori And Practice of The Multilateral Trading System :

- Introduction
- The economic foundations
- Legal, economic and political challenges for the WTO

1. Introduction :

Three major developments were required before a multilateral trading order could be created,
including the emergence of two ideas and the resolution of a paradox. The first idea is that countries
are sovereign, and hence have control of their own destinies, but also that the best exercise of
sovereignty is to enter into binding agreements with other states by which they place voluntary and
mutual limits on their exercise of that sovereignty. The second idea was the notion that countries
extract mutual gains from freer trade. The third development concerned power its paradox.

2. The economic foundations :

1. Trade, power, and independence
2. The political foundations
3. Trade, development and discrimination
4. Objections to materialism and the market
5. The economic rationale for open markets

 The economic rationale for open markets :

- Adam Smiths’s arguments for free trade were based on specialization and the absolute
advantage that individuals or countries may enjoy in the production of goods.
- Ricardo’s concept of comparative advantage supplied the rest of that rationale, explaining why
even countries that are the best at nothing can still gain by exporting.

 Objections to materialism and the market :

The expanding scope of negotiations creates greater friction between WTO members who hold
differing views about the role of the state, whether in the domestic or international form.

 Trade development and discrimination :

Economists have debated the merits of discriminatory arrangements since the mid-twentieth
century, but they have come to no consensus on whether, on the whole, these arrangements can
best be seen as building blocks or stumbling blocks for the multilateral trading system.
The only point on which there is absolute agreement is that discrimination proliferated far more
rapidly in the WTO period than it did in the GATT period, with agreements expanding both in
number and in significance.

 The political foundations :

If the multilateral trading system had to be reduced to a single sentence. It might be this it receives
its inspiration from economists and is shaped primarily by lawyers, but it must operate within the
limits that the politicians set.

 Trade, power and independence :

Scholars and practitioners who adopt a political view of the system differ from the disciplines
reviewed above not so much in what they examine as in how they choose to see it. Where legal
theorists and lawyers look for principles, and economists and business people see interests, political
scientist and statesmen focus on power.

3. Legal, economic and political challenges for the WTO

- The legal challenge
- The economic challenge
- The political challenge

- Legal, economic and political challenges for the WTO