In bilateral economic and trade agreements, as in investment partnerships, it is the bargaining power that is important. For example, the EU appears to have been in a weaker negotiating position and in the limited ability to confirm the European model during the TTIP negotiations. According to Winters, there are two reasons that are related to TPP11. Firstly, it was the EU that, in response to the TPP, sought a transatlantic trade agreement for fear of losing in international trade. Second, the TPP was created as a free trade area, which extended to issues such as intellectual property protection and arbitration between investor disputes and litigation, in line with U.S. preferences; TTIP was essentially a child of the TPP. Trefler, D. (2004). The long and concise free trade agreement between Canada and the United States. American Economic Review, 94(4), 870-895. Available online here.
Before you begin your reading on the World Trade Organization (WTO), take a few minutes to watch the following video, which will give you a background on the General Agreement on Tariffs and Trade (GATT), and explain how it became the WTO we know today. Remember, the world is much smaller today than it was when your parents and grandparents were growing up, and international trade has not always been the norm. After watching the video, think about the impossibility of world trade without any kind of agreement between nations. The question of whether the WTO fulfils its duty and fulfils its mission is the subject of ongoing debate. Yet the WTO currently has 104 members and 20 observer governments. WTO member countries account for nearly 97% of world trade and 98% of global GDP. As soon as the 20 observational governments become members, it is possible that the WTO will oversee the entire global economy. What began in Geneva in 1947 and which 23 nations focused exclusively on tariff reductions has become a truly global organization dealing with agriculture, labour standards, environmental issues, competition and intellectual property rights.
Overall, available data indicate that trade liberalization improves economic efficiency. These results come from different political and economic contexts and cover both micro-efficiency and macro-efficiency criteria. 29. Garlaschelli D, Loffredo MI. Structure and development of the global trading network.