WTO helps to promote peace which is an outcome of two important principals of trading
WTO helps to promote peace which is an outcome of two important principals of trading.
Helping trade to proceed easily and dealing with disputes concerning trade issues. Additionally, the system helps increasing international confidence and cooperation. History shows examples where trade disputes led to wars. The most known trade war is the one that happened in 1930s when countries raised trade barriers to protect domestically produced products and retaliate in opposition to other’s barriers. This intensified the great depression and also played a role in starting the World War 2. Then, general agreement on Tariffs and Trade (GATT) was created to avoid a repeat of pre-war trade tensions.
When trade flows smoothly, and both trade partners are satisfied enjoying a healthy commercial relationship, the probability of conflict will be lower. Also, the WTO is a confidence-builder. The trade wars in the 1930s proved how protectionism can cause a situation where none of the countries wins and everyone loses. People who defend protectionism only take into consideration the short term effect which is the benefit for domestic products since imports will decrease. However, the long term effect of protectionism is negative, because once a country is protectionist other countries will do the same which leads to a loss of confidence in freer trade and all the economy will be affected negatively even the sectors that were originally protected.
Confidence is an important solution to avoid that kind of no-win scenario. When governments are sure that others will not elevate their trade barriers, they will not do the same. On the contrary, countries will be in a better state of mind to collaborate with each other. The WTO has a major role in creating and strengthening that confidence.
More trade expansion means more risks of disputes which can lead to huge conflict. In reality, the increase in disputes number brought to the WTO does not indicate an expanding tension in the world. Instead, it proves stronger economic ties everywhere in the world, and the increasing number of countries who are joining the WTO, shows their faith in the system to solve their differences.
The decisions in the WTO are made by consensus. All agreements in the WTO are negotiated by all members and applied to each country without differentiating between rich or poor countries they both have the right to express, equally, their point of view in the WTO’s dispute resolution strategies.