The Role of WTO in the Liberalization of Trade Literature review

The Role of WTO in the Liberalization of Trade - Literature review Example International monetary affairs and trade are interlinked due to the fact that monetary and fiscal areas are also associated with exports and productivity growths. Integration of evolving economies into the international economy facilitates competition for capital and aid. It is evident from capital flow from expanding markets by commercial banks, private investors and multinational enterprises. The recent financial crisis has highlighted the risks involved in this process. Therefore, IMF and World Bank actively play their roles as financer or as a watchdog.WTO plays a critical role in drawing funds through trade and foreign investment liberalization. International trade is imperative for economic growth; therefore, it is essential for emerging economies to accelerate economic reforms (Hoogmartens, 2004, p.9). The fundamental objectives of WTO as well as its predecessor GATT, as Hoogmartens (2004) observes are to serve as a forum to negotiate trade liberalization, to monitor and develop better measures for transparency and to work for resolve issues between trade participants. In addition to that, the fundamental objective includes raising living standards, working towards providing full employment, production and trade expansion, and ultimately, optimal utilization of the world’s resources. In order to achieve these objectives, WTO/GATT work towards fixing or limiting the impact of trade barriers, for instance, quotas, customs process, tariffs, state trading and subsidies in addition to paving the way for trade liberalization(p.10). Hoogmartens (2004) further states, â€Å"Tariffs are generally believed to distort competition and to attribute monopoly rents to producers in countries that uphold them. Quotas are also believed to distort competition, but usually, do not yield more p rofit for domestic producers. Furthermore, their administration may yield corruption, just as discriminatory licensing may†. (p.10)