1. International Trade and the World Trade Organization
Metropolitan University Prague
Martin Kolmhofer, Ph.D.

2. The World Trade Organization (WTO): 160 Member States, based in Geneva
Main function: To supervise and liberalize international trade

3. 90 % of World Trade are done between WTO members

4. The idea to establish an institution to regulate international trade started at the end
of WWII.

5. The WTO’s ideology is based on classical theories of free trade (Adam Smith, David
Ricardo).
The Great Depression (1929) was seen as one of the reasons for WWII because of
return to protectionism.

6. Video: Why do countries restrict trade?

7. 1948: 23 countries signed GATT (General Agreement on Tariffs & Trade)
3 did not ratify

8. The GATT was replaced by the WTO in 1994

9. The 23 participants of the first (Geneva) round of GATT negotiations took only six
months to conclude a deal that reduced 45,000 tariffs. But there are now over
150 members of the WTO, a number that makes negotiations considerably more
difficult.
Why do trade negotiations take so long?

10. 2014: 160 Members + 24 Countries with Observer Status
(They can participate in meetings but cannot take part in the decision-making
process)

11. Most Important Trade Routes (Ship, Plane, Internet)

12. China joined WTO in 2001 – by now China is the biggest exporter of finished goods

16. THE BALTIC EXCHANGE (London)
• Forum for International Shipping Business of
all kinds
• Trade Finance, Insurance, Legal Services…
• The Exchange provides daily freight market
prices (Baltic Freight Index)
• www.balticexchange.com

17. Russia joined the WTO in 2012. Access talks (started 1993) were difficult.
(Russia did not want to grant access to its mining industry to foreigners)

19. WTO is based on “one country, one vote”.
The European Union has one vote per member + one vote as an organization

20. MFN (Most Favored Nation) Clause: Under the WTO agreements, countries cannot
normally discriminate between their trading partners. If they grant someone a special
favor (such as a lower customs duty rate for one of their products) they have to do the
same for all other WTO members. Exceptions: Regional Free Trade Areas

21. 4 big Free Trade Areas: EU, Mercosur, NAFTA, ASEAN

22. Average tarrifs (as percentage of the value of the good) have decreased
considerably since 1945

23. Dispute Settlement Body (DSB)
Example: EU refuses to import genetically manipulated beef from Canada & US
Considered by DSB as NON-TARIFF BARRIER.

24. Example: US subsidies for BOEING were considered illegal
EU was allowed to react with sanctions

25. Latest round of Negotiations (Doha Round) started in November 2001
Major issue: agriculture and agricultural subsidies
Developed vs. developing countries / EU vs. US

26. CAIRNS Group: Trade group of 17 agricultural exporting countries, accounting for
one-third of the world's agricultural exports.

27. G90: Alliance between the poorest and smallest developing countries

32. HISTORY OF POLITICAL AND ECONOMIC THOUGHT

33. FINANCIAL MARKETS: THE CITY OF LONDON

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