Introductory Trade Issues: History, Institutions, and Legal Framework
Read this summary of the General Agreement on Tariffs and Trade (GATT), which evolved into the World Trade Organization (WTO) in 1995 and currently has 164 members. The WTO is a forum for governments to negotiate trade agreements and settle trade disputes. It operates an international system of trade rules. They are contracts that bind governments to keep their trade policies within agreed limits. Its goal is to "help producers of goods and services, exporters, and importers conduct their business while allowing governments to meet social and environmental objectives". (WTO)
Introduction
Economics is a social science whose purpose is to understand the
workings of the real-world economy. An economy is something that no one
person can observe in its entirety. We are all a part of the economy, we
all buy and sell things daily, but we cannot observe all parts and
aspects of an economy at any one time.
For this reason,
economists build mathematical models, or theories, meant to describe
different aspects of the real world. For some students, economics seems
to be all about these models and theories, these abstract equations and
diagrams. However, in actuality, economics is about the real world, the
world we all live in.
For this reason, it is important in any
economics course to describe the conditions in the real world before
diving into the theory intended to explain them. In this case, in a
textbook about international trade, it is very useful for a student to
know some of the policy issues, the controversies, the discussions, and
the history of international trade.
This first chapter provides
an overview of the real world with respect to international trade. It
explains not only where we are now but also where we have been and why
things changed along the way. It describes current trade laws and
institutions and explains why they have been implemented.
With
this overview about international trade in the real world in mind, a
student can better understand why the theories and models in the later
chapters are being developed. This chapter lays the groundwork for
everything else that follows.
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