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economic stability and improve living standards around the world. The hope was that by fostering commerce and cooperation between nations, conflicts could be prevented. One important accord which rose from the ashes of the war was the General Agreement on Tariffs and Trade (“GATT”). Signed in 1947 by 23 nations, GATT sought to eliminate the pre-war protectionist trade practices which had contributed to global tensions, and to promote free trade among nations . Goodbye GATT. Hello WTO. The terms of GATT dealt mainly with trade in manufactured goods and products . In 1947 no one could have foreseen the explosion of international commerce that would occur over the next 50 years, particularly in the area of intellectual property. By 1995, GATT membership had grown to 128 nations, but the agreement was becoming less and less relevant to the realities of modern commerce. In fact, GATT loopholes had been exploited by a few member nations who found ways to back out of their commitments and make “side deals” outside of GATT. In 1995, GATT member nations, cognizant of the need for a new world trade order, founded the World Trade Organization (“WTO”) dedicated to the promotion of global free trade by breaking down barriers to trade and providing a forum for negotiating trade agreements and resolving disputes . The WTO’s overall objective is to ensure that trade flows as fairly, predictably, and freely as possible between nations. The WTO Sets the Bar With the exception of North Korea and a few other minor countries, most nations are members of the WTO or have applied for membership. Member nations are parties to the WTO multilateral trade agreement wherein they have agreed to the same basic rules and terms of fair and free trade . As members of the WTO, they have committed to a basic level of free and unrestricted trade, below which they may not fall. They may agree to better trading terms called preferential treatment , but are bound to a basic level of free and open trade in all WTO member nation transactions. Free Trade: Benefits and Barriers Free trade is the unrestricted purchase and sale of goods and services between countries . Free trade means that imports and exports flow freely between nations, and that foreign markets are open without barriers , to the goods and services of other countries on the same terms and conditions as the goods and services of local companies. There are many benefits to free trade: • better, cheaper goods for the consumer as a result of increased competition • economic growth of the trading nations • increased innovation • improved employment and higher wages • reduced hostilities between successful trading partners SLIDE 17H SLIDE 17G PRODUCT PREVIEW
Lesson 17 | Breaking Down Barriers 318
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