SUBJECT-WTO AND THE FREE TRADE.

World Trade Organization

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade.The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing its predecessor, the General Agreement on Tariffs and Trade (GATT), which was commenced after World War II in 1948, in the wake of other new multilateral institutions dedicated to international economic cooperation — notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. The world trade organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

THE FREE MARKET

A free market is a market free from state intervention. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts. It is the opposite of a controlled market, in which the state directly regulates how goods, services and labor may be used, priced, or distributed, rather than relying on the mechanism of supply and demand.

-DONALD MARSH (THE JANUARY NEWSLETTER) & WIKIPEDIA

Laissez-faire economics

Main article: Laissez-faire economics

The necessary components for the functioning of an idealized free market include the complete absence of artificial price pressures from taxes, subsidies, tariffs, or government regulation (other than protection from coercion and theft), and no government-granted monopolies (usually classified as coercive monopoly by free-market advocates) like the United States Post Office, Amtrak, patents, etc.

DISCUSSION:-

FUNCTIONS OF WTO:-

Among the various functions of the WTO, these are regarded by analysts as the most important:

· It oversees the implementation, administration and operation of the covered agreements.

· It provides a forum for negotiations and for settling disputes

EFFECTIVENESS:-

Developing countries

Critics contend that smaller countries in the WTO wield little influence, and despite the WTO aim of helping the developing countries, the politicians representing the most influential nations in the WTO (and within those countries or between them, influential private business interests) focus on the commercial interests of profit-making companies rather than the interests of all.[citation needed] Martin Khor argues that the WTO does not manage the global economy impartially, but in its operation has a systematic bias toward rich countries and multinational corporations, harming smaller countries which have less negotiation power.

Labour and environment

Other critics claim that the issues of labor and environment are steadfastly ignored. Steve Charnovitz, former Director of the Global Environment and Trade Study (GETS), believes that the WTO "should begin to address the link between trade and labor and environmental concerns.

Decision making

Other critics have characterized the decision making in the WTO as over-simplified, ineffective, unrepresentative and non-inclusive; more active participants, representing more diverse interests and objectives, have complicated WTO decision-making, and the process of "consensus-building" has broken down.

DISADVANTAGES OF FREE MARKET:-

Deregulation

In an absolutely free-market economy, all capital, goods, services, and money flow transfers are unregulated by the government except to stop collusion or fraud that may take place among market participants. As this protection must be funded, such a government taxes only to the extent necessary to perform this function, if at all. This state of affairs is also known as laissez-faire.

Low barriers to entry

A free market does not require the existence of competition, however it does require that there are no barriers to new market entrants. Hence, in the lack of coercive barriers it is generally understood that competition flourishes in a free-market environment. It often suggests the presence of the profit motive, although neither a profit motive or profit itself are necessary for a free market. All modern free markets are understood to include entrepreneurs, both individuals and businesses. Typically, a modern free market economy would include other features, such as a stock exchange and a financial services sector, but they do not define it.

-Wikipedia

CONCLUSION:-

By doing all the study over the topic of WTO & FREE MARKET,I reached at the following conclusions:-

1.Free market allows a person to select a super market providing desired groceries at low prices, a doctor providing medical care for a fee considered reasonable, a computer store offering a wanted PC at the lowest price. Freedom to fulfill needs at the lowest cost accomplishes two things that benefit both the individual and society.

2. It increases real income since, after buying one product, more income is left over to fulfill other needs. Secondly,

and importantly, free trade results in efficient use of resources, since it is producers who use productive

resources most efficiently that provide products at the lowest cost.

On other hand,WTO is designed to

a) Reduce and eliminate tariffs.

b) freeing trade in services and other products not covered by GATT, notably agriculture, improved protection of intellectual property, and provision for resolution of trade disputes between governments.

c) contributes to unprecedented growth in real incomes and

living standards.

In the end, If improved economic education is provided to common peoples, it can help the peoples to get the better view among both i.e. WORLD TRADE ORGANISATION & THE FREE TRADE.

Submitted to:-

Sh. Gurdeepak SINGH

Submitted by:-

Anuj mehta

MBA-A (SEM-1)