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Trade organizations aim to liberalize trade between member countries, reducing tariffs and other barriers. The World Trade Organization (WTO) is the largest and governs most of the world’s trade. Other organizations include NAFTA and JETRO.
Trade organizations are voluntary associations between countries, formed for the purpose of liberalizing or opening up trade between those countries. Member countries of trade organizations can, for example, agree to mutually authorize products in their respective markets, without those products being subject to tariffs or other trade barriers. This is done with the intention of delivering economic benefits to all countries involved.
There are many formal and informal trade organizations between the countries of the world, but the best known of these is the World Trade Organization (WTO). The WTO was founded on 1 January 1995 as a successor to the General Agreement on Tariffs and Trade (GATT). The WTO has as member nations, most of the world’s countries, including all of North America and South America, most of Sub-Saharan Africa, Southeast Asia, the South Pacific, Australia and of Europe. This represents over 95% of total world trade.
The purpose of the WTO is to supervise and liberalize international trade. It is based in Geneva, Switzerland, and is governed by a Ministerial Conference which meets every two years. In essence, the WTO serves as a venue for member governments to resolve trade problems they may be facing, with a primary emphasis on negotiation. It also operates a system of trade rules that its member countries agree to abide by.
Another well-known trade organization is the North American Free Trade Agreement (NAFTA). NAFTA is a trade agreement between the United States, Canada and Mexico. The agreements were signed on December 8, 1993. Both the positive and negative effects of NAFTA have been studied and quantified by economists. Some support NAFTA, saying Mexico has seen its poverty rates fall and real income levels rise. Others argue that business owners and the wealthy in all three countries have benefited, but Mexican farmers have been negatively impacted by falling food prices and some US workers in manufacturing and assembly have lost their jobs.
Numerous other trade organizations and agreements exist between countries around the world. One example is the Japan Foreign Trade Organization (JETRO). This is a government-related organization that was founded in 1958 to promote trade between Japan and the rest of the world. JETRO’s focus for the 21st century has been shifted from promoting Japanese exports, to promoting foreign investment in Japan, to helping Japanese companies reach their maximum export potential around the world.
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