Published 04 Oct 2017

The establishment of the World Trade Organization has a definite goal in achieving equal opportunities for member countries to have a very good relationship with each other. This aim of course is intended to be implemented in terms of trading transactions of commodities and services. Since there is a very good chance that countries will eventually merge and partner with each other to get mutual benefits, it would just be a very good approach if a governing institution can at least become the guiding factor in conducting international purchases and sales of economic goods. In this aspect, making use of an organization’s principle will let elemental units of the system to interact more dynamically at least in terms of market sharing and profitability. Add to this some of the underlying effects which should always be monitored to help keep the system achieve its goal.

There are many benefits which can be extracted from the principle of becoming a member of the WTO, the first of which can be attributed in a sense of global trade. There is a distinct advantage if a market will be able to expand to the activities of a global trading process. Since the member countries can have very transparent transactions to other partner economies, the possible reduction of expenses related to cross boundary delivery of goods can be lessen or even eradicated. A very good example of such cost is the value of tariff and tax correspondence. This aspect can at least help international traders to cut their importation and exportation costs resulting to substantial savings in terms of company expenses. It is very possible that the saved amount can be allocated to other functions of marketing such as improving the product or even optimizes the prices when the items reach the local markets.

Another advantage may be seen in the local parameters of member countries. Because of the complete direct interaction of the member countries, those low performing economies can eventually receive additional domestic employment for their populations. As long as the trading processes remain active, the people within the economic partners will have greater opportunities to acquire jobs. One very good example can be seen among developing countries. Since these units have been plagued with unacceptable unemployment rates, the exposure of respective economies to world trade will eventually increase their capacities to entertain labor positions coming from international trade transactions. The more activities there are in a trading block, the more labor factor are involved, thus increasing the available jobs for the people.

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Lastly, the commodities of the global market will be distributed proportionally to all member nations. Goods from industrialized countries can easily penetrate other markets while at the same time commodities from developing producing countries can go across and sustain the needs for raw materials of industrialized countries. Because of the potential to reduce the production costs in such arrangement, both sides can enjoy greater returns and value for money. Countries which fabricate products will be able to buy cheaper raw materials. In effect, countries which depend mainly on finished commodities will be able to purchase their needs also in much cheaper costs. This type of “circular” effect can sustain a very healthy economic growth since mutual interaction is employed. Producers tend to become buyers and buyers tend to become producers as well.

Although there seems to be a lot of positive effects in the establishment of the organization, counterpart drawbacks are also present. According to About, a New York Times partner, the first possible case of disadvantage can be observed on how the elemental units of trade are affected. In marketing economics, the elemental units which practically run the entire cycle of economic activity include the laborers, the environmental resources and the consumers. WTO may only be beneficial to large scale corporations in which the target parameter of profit generation is concentrated. Since most of large scale producers are very particular with the amounts of gains they can get, some capitalists would never even care to check whether there are concerns worthy of giving resolutions. This undermines other factors which are considered to be more important like the welfares of the laborers, benefits for the consumers and the status of the environment. For example, there have been so many cases when American laborers were positioned at a disadvantage due to the migration of good paying jobs to overseas cheap labor markets. (Rogne 1).

Another problem with the implementation of the free-trade program is the unfair practices of capitalists which have a more influential status in the global trade. One very obvious effect would be the dismantling of the marketing powers of local producers in each country. Apparently, the larger the company, and the wider scope it has in terms of resource usage, the bigger its competitive advantage is. For example, the developing member countries could be the most affected units in this type of scenario. Since products or services from abroad will be able to penetrate their economies with very minimal restrictions, there will be a great chance that the competitiveness of their local industries will be lessened, worse even die. The main disadvantage factors can be one or all the following; local companies extend a high costs of production due to unstable local markets; local products will be overlooked because of the high quality factor of known brands from abroad which consumers tend to patronize on top of the cost and more often than not, foreign products from established names will become much cheaper than local competitors since these items were produced using very minimal financing on the part of multinational entities. Moreover, domestic laws are sometimes not enough to serve as safety nets in the event that free trade can no longer support the fair exchange of goods and services.

One last concern in global trading is the fact that it would be much more difficult to monitor whether global companies are actually complying to what the WTO has set in the fair trade practices rules. This can be especially true for medium to small market economies since it would entail additional costs on their part. In a capitalist world, it cannot be denied that profit generation almost always overshadows the true principle of fair trading. Therefore, it would only mean that anomalies can be very hard to resolve or even be detected. Money always puts the prime power to whoever has it.

Works Cited

  • About. December 1 1999. New York Times. November 14, 2007.
  • Rogne, Trana. Free-trade deals are often unfair to American workers. The Jamestown Sun. November 7 2007. Forum Communications Company. November 14, 2007.
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