1) The World Trade Organization (WTO) is an intergovernmental organization that is

concerned with the regulation of international trade between nations. The WTO officially
commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on
15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which
commenced in 1948. It is the largest international economic organization in the world.

The WTO deals with regulation of trade in goods, services and intellectual property between
participating countries by providing a framework for negotiating trade agreements and
a dispute resolution process aimed at enforcing participants' adherence to WTO agreements,
which are signed by representatives of member governments [7]:fol.9–10 and ratified by their
parliaments.[8] The WTO prohibits discrimination between trading partners, but provides
exceptions for environmental protection, national security, and other important goals. [9] Trade-
related disputes are resolved by independent judges at the WTO through a dispute
resolution process.

the role of WTO in international trade

 WTO’s aim is to liberalise international trade.

 It establishes rules regarding international trade and sees that these rules are
obeyed.
 161 countries of the world are its members currently.
 It is seen that the developed countries have unfairly retained trade barriers. On the
other hand, WTO rules have forced developing countries to remove trade barriers.

WTO's aim is to liberalise international trade. It establishes rules regarding international trade and
sees that these rules are obeyed. ... It is seen that the developed countries have unfairly retained
trade barriers. On the other hand, WTO rules have forced developing countries to remove trade
barriers.

2) Regional trade agreements (RTAs) have risen in number and reach over the
years, including a notable increase in large plurilateral agreements under
negotiation. Non-discrimination among trading partners is one of the core
principles of the WTO; however, RTAs, which are reciprocal preferential trade
agreements between two or more partners, constitute one of the exemptions and
are authorized under the WTO, subject to a set of rules. Regional trading
agreements refer to a treaty that is signed by two or more countries to
encourage free movement of goods and services across the borders of
its members. The agreement comes with internal rules that member
countries follow among themselves. ... Tariffs are a common element in
international trading.
Difference between free trade agreement and custom unions

1. Free trade
 Where a group of countries agree to trade without barriers between themselves,
but maintain their own individual barriers with countries outside the area.
 The free trade area is the least restrictive and loosest form of economic
integration among countries
 In a free trade area, all barriers to trade among member countries are removed.
 Eg: NAFTA
2. Custom unions
 This goes further than free trade, which eliminates not only barriers to trade between
the member countries but also to have a common tariff barriers against the rest of the
world.
 Members of a customs Union dismantle barriers to trade in good and services among
themselves
 A customs Union establishes a common trade policy with respect to nonmembers
 Eg; the single market

3)Tariff Effects
The additional tax, or tariff, on imported goods can discourage foreign countries or
businesses from trying to sell products in a foreign country. The additional taxes make
the foreign import either too expensive or not nearly as competitive as it would be if the
tariff didn't exist. This can lead to fewer choices of goods and a lower quality for
consumers. The amount of chocolate, fruits and vegetables, and automotive parts you
have to choose from are all subject to the effects of tariffs.
Domestic producers benefit by ultimately facing reduced competition in their home
market, which leads to lower supply levels and higher prices for consumers. As you can
see from the graph below, S0 and D0 represent the original supply and demand curves,
which intersect at (P0, Q0). St shows what the supply curve is with the introduction of
the tariff. The market then settles at (Pt, Qt). Less of the good is produced, and

consumers pay higher prices. When a consumer does purchase a higher-priced

imported good with a tariff imposed on it, the consumer now has less money to spend
on other things. This forces consumers to either buy less of the imported good or less of
some other good, ultimately lowering the purchasing power of consumers. It is important
to remember that although consumers may pay higher prices because of tariffs and
have limited options, the potential benefit is that domestic sales of goods can increase,
ultimately leading to higher domestic sales and more jobs for companies inside the
country

Quota
As a result of this quota, domestic production, consumption, and imports would
be the same as those of the tariffs. Thus, the output effect, the consumption effect
and the import restrictive effect of tariffs and quotas are exactly the same.
The only difference is the area of revenue. We have already seen that a tariff
raises revenue for the government while a quota generates no government
revenue. All the benefits of quotas go to the producers and to the lucky importers
who manage to get the scarce and valuable import permits.

In such a situation, a quota differs from a tariff. However, if import licences are
auctioned-off to the importers then the government would earn revenue from the
auction. Under these circumstances, the effect of a quota and a tariff are
equivalent