jan 1, 1995 - World Trade Organization (WTO)
Description:
Question 1a.
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.
The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to the WTO agreement. Often, individual states may have a common interest in a public good, but that this is not a sufficient condition for the good to be provided because of free-riding incentives. In the context of free trade, although all states have a collective interest in free trade, every state has an incentive to protect its own producers while benefitting from other states opening up their domestic markets. Thus, the establishment of the WTO intends to solve this cooperation problem, also known as the prisoners’ dilemma. One of the three major components of the WTO is a set of principles and rules. Setting standards to make violations can solve potential cooperation problems.
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