Today we have a look at the World Trade Organization (WTO).

Firstly we mark the member states of the World Trade Organization, altogether are
there 160 member states.

Its headquarters is in Geneva

(Switzerland).

The main purpose of the World Trade Organization is to regulate and liberalize
world trade.

Since more than 95% of the trade is processed between member states, is the WTO
very important.

The idea to establish an organization, which regulates the international trade,

arose after the Second World War,

just like the idea to

found the United Nations (UN), the International Monetary Fund (IMF),

and the World Bank. The

idea based on the free trade theories of Adam Smith and David Ricardo,

but was also boosted

by the Great Depression in the 1930s,

because the return to economic protectionism was considered as a reason for the
Second World War.

Therefore thought one, that economic agreements could protect peace between the
countries.

In the year 1947 were the international trade relations regulated by the General
Agreementon Tariffs and Trade (GATT).

23 countries signed this agreement in 1948, but three of them didn't ratify it.
(Lebanon, Syria and China)

To the GATT belonged 128 countries in 1994

and it was replaced at the beginning of 1995 by the World Trade Organization.

Today are 160 countries member states of the WTO and 24 governments have observer
status.

Since 1950 increased the world trade volume twentyfold.

Here can you see all trade routes, inclusive sea, internet and air.

Most of them are between the industry nations, but the trade with countries in Asia
increases fast, many products

because they export many productsto North America and Europe.

How does the World Trade Organization work?

Every member of the WTO has to comply with the "most favoured nation" (MFN)
principle. That means when one member state grants for example
trade benefits to another member state,
it has to grant the same trade benefits to every other nation in the organization.

But there is an exception to the "most favoured nation" principle: free trade
zones.

Here can you see the four most important free trade zones:

To the North American Free Trade Agreement(NAFTA) belongs Mexico, Canada and the
United States.

To the Mercado Común del Sur (Mercosur)

belong five South American countries, plus five additional associated nations.

The European Union (EU), which has nearly no customs barriers.

And the Association of Southeast Asian Nations (ASEAN), which has ten member
states.

Reason for this exception is the idea, that regional integration is the first step
to
global integration.

Global duties decreased on average almost

completely since 1945.

So decreased duties on average from 40% of the product value to 2.2% today.

The Budget of the World Trade Organization is also used for the so called Dispute
Settlement Body (DSB),

which handles trade disputes.

Such a dispute existed for example between the Unites States and the European
Union.

The European Union complained about the U.S. subsidies for the aircraft company
Boeing.

In January 2011 declared the World Trade Organization those subsidies illegal and
allowed the EU
to react with reasonable trade sanctions.

Another problem area in the WTO is agriculture,

one of the last economic sectors which isn't completely liberalized.

Here can you see the

development of the grain prices. They are related to

the increasing demand for animal

food, to price speculations, but also to conflicts and changes in weather.

Because of those factors

increased the grain prices and that resulted in food riots in many member states of
the World Trade Organization in the year 2008.

Within them: Mexico, Egypt and Indonesia.

Agriculture is still an important topic in the WTO,

especially because of the differences

between the north and south countries.

The emerging markets in the south make the majority in the World Trade
Organization,

but they suffer under the industry nations, which support their agriculture with
subsidies.

Because of this tried the WTO to establish

a new basis of trust with the so called

"Doha Development Round", but unfortunately couldn't

they make any agreements until today.

I hope you enjoyed our trip to the World Trade Organization, but there's still a
question left:

What do you think?