• Describe the role of international organizations in global business
• Describe how trade agreements help global business

International Cooperation

In this section, you will learn about international organizations that support shared prosperity among nations and how cooperation between countries can promote global trade.

The World Trade Organization

The World Trade Organization (WTO) has emerged as the world’s most powerful institution for reducing trade barriers and opening markets. The advantage of WTO membership is that member countries have lower trade barriers among themselves. Countries that don’t belong to the WTO, such as North Korea and Eritrea, must negotiate trade agreements individually with all their trading partners. It currently has 166 members and 23 observer governments.^[1] WTO members account for almost 97 percent of global trade and 98 percent of global GDP.

The most important functions of the WTO are:

• Overseeing the implementation and administration of the agreements between nations that fall under the WTO’s scope of authority
• Providing a forum for negotiations and settling disputes among nations

In recent years, the WTO has also made it a priority to assist developing nations upon joining the WTO. Many developing countries and emerging markets lack the experience and technical expertise needed to deal with large and very comprehensive trade agreements. The WTO provides them with critical training and support, thereby ensuring that the WTO is inclusive and equitable toward both the wealthiest and the poorest nations in the world.

WTO members are required to publish their trade regulations and follow a system that allows external parties to review and evaluate any administrative decisions and their impact on trade regulations. When a WTO nation changes its trade policies, those changes must be reported to the WTO. Overall, the WTO’s mission is to improve the stability and predictability of global trade. As a result, it tends to support free trade rather than protectionist tariffs and strongly discourages the use of quotas and other such restrictions.

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