The Crisis in the International Trading System
Chapter 16: Is it time to Re-think the WTO? A Return to the Basics
16. Is it time to re-think the WTO? A return to the basics 1. INTRODUCTION It is often forgotten in the midst of the nationalist or anti-nationalist rhetoric in media coverage of the World Trade Organization (WTO) that it is firms that engage in international commercial transactions – countries do not engage in trade.1,2 International trade is simply the aggregation of the fruits of those transactions on a national basis. Trade is the result of a firm in one country identifying a business opportunity in another country and then organising a commercial transaction to act on that opportunity. If a firm in London sees a commercial opportunity to sell its goods to a firm in Manchester, no one pays any attention. If that same London firm finds a similar opportunity to sell an identical good to a company based in New York, all manner of groups – not the least of whom are politicians – feel they have a duty, and a right, to comment on and otherwise become involved in the transaction. Governments strongly guard the right to tax, limit, and in other ways regulate international transactions in ways that differ from their interventions in domestic commerce. One of the reasons for this is that they have no authority to monitor production and commercial practices in foreign countries. An equally important reason, however, is the ability to extend protection from foreign competitors to domestic petitioners. While most politicians believe that open international markets are generally beneficial, they do not believe this...
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