Abstract:
In this paper we will discuss about the principles of trading system set by the World Trade Organization. The WTO member countries have to obey these principles while trading with each other.
The World Trade Organization (WTO) has set some standardized principles of trading which the global businessmen obey. The principles are applicable for all the sectors. The main features of these principles are described below.
Free Trade:
The WTO has removed some of the trade barriers to encourage inter-country trading. These are, tariffs, that is, the custom duties, bans on some specific commodities etc. Several other trading issues, for example, exchange rate policies, red tape etc, have been discussed also.
Open markets are extremely beneficial for improving the standard of global business. The WTO principles allow the countries to materialized their trading plans in a more efficient way. The developing and underdeveloped countries are normally given extra privileges.
Trade Without Discrimination:
All the countries obeying WTO principles are not allowed to discriminate between their global trading partners. If any country allows some tax cuts for a particular trading partner, who is a WTO member, then it has to allow the same for all the other WTO member countries. This rule is termed as the "most-favored-nation treatment". However, some exceptions are also there. The developed countries can give some extra privileges to their developing or underdeveloped countries.
Fair Competition:
The WTO has removed some market barriers not only to open the market for the member countries but also, to promote competition in the global trading market. The trading principles set by the WTO are meant to allow fair and undisturbed market competition.
Predictability:
The countries obeying the WTO principles have to bind their trading commitments. This increases the transparency and predictability of the trading nations. For the developing countries, import tax rates are less than the bound rates, that is, ceiling on tariffs.
Development and Economic Reform:
The WTO principles are continuously focusing on economic and social development. In many underdeveloped countries, WTO has started some economic reform programs to bring those countries on the arena of modern global trade.
