Global Regulation of Trade

 (This is a current extract from the Patterns of Power Repository.  An archived copy of this page is held at http://www.patternsofpower.org/edition02/3545.htm)

The World Trade Organisation (WTO) is the forum which was set up in 1994 to host negotiations on the freeing of trade.[1]  It also prevents countries from setting new tariffs or banning imports, although it does allow exceptions on health grounds – as was the case with British beef in 1996, for example.[2]  It has ruled on numerous trade disputes.[3]

A popular perception in the West is that jobs can be protected by protectionism.  It seems intuitive that this would be the case but, as outlined earlier (, there is a strong economic case for advocating free trade because it benefits the economies of both rich and poor countries.  The arguments for reducing existing tariffs are rationally strong, but they fail to counter politicians' assessment that it is in their short-term domestic political interests to argue for protectionism.  They do so both at the WTO, where progress towards free trade consequently proceeds at a snail’s pace,[4] and in domestic politics.

Politicians, such as the French presidential candidates in the 2012 elections, tend to play to the misinformed populist perceptions of free trade, rather than to explain its benefits.[5]  American politicians also succumb to populism, particularly in election years, despite the long-term damage that this would inflict on their own country and on the whole world.[6]

© PatternsofPower.org, 2014

[1] The World Trade Organisation (WTO) was created on 15 April 1994.  In April 2014, it described itself as “the international organization whose primary purpose is to open trade for the benefit of all” – on its website at http://www.wto.org/english/thewto_e/whatis_e/wto_dg_stat_e.htm,

[2] On 8 March 2006, the BBC published the history of the ban in an article entitled Timeline: British beef ban, which was available in April 2014 at http://news.bbc.co.uk/2/hi/uk_news/4785610.stm.

[3] On 15 February 2012, the BBC published a “chronology of key events” in an article entitled Timeline: World Trade Organization, which was available in April 2014 at http://news.bbc.co.uk/2/hi/europe/country_profiles/2430089.stm.

[4] The Doha round of trade talks at the World Trade Organisation (WTO) in Geneva reached an impasse after 10 years of negotiation.  On 28 April 2011 The Economist reported that “Ten years of trade talks have sharpened divisions, not smoothed them” at the beginning of an article entitled The Doha round, which was available in April 2014 at http://www.economist.com/node/18620814.  It focused on political disagreements between America, China and India.

[5] For example, on 17 September 2012 the BBC published a report, entitled Protectionism: Is it on the way back?, which drew attention to France:

“The recent French presidential election saw both the successful challenger, Francois Hollande, and the defeated incumbent, Nicolas Sarkozy, stepping up their protectionist rhetoric in an effort to woo the 80% of voters who are anti-globalisation.”

This article was available in April 2014 at http://www.bbc.co.uk/news/business-18104024.

[6] On 22 February 2014, The Economist published an article entitled American trade policy: How to make the world $600 billion poorer.  It included this assessment:

“Reasonable estimates say that the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) could boost the world’s annual output by $600 billion—equivalent to adding another Saudi Arabia. Some $200 billion of that would accrue to America.”

The article was available then at http://www.economist.com/node/21596934.