Question

You are the top economic advisor to the president of Developia. She must decide if Developia will join the World Trade Organization (WTO). She is reluctant to join in an institution that promotes free trade. She has two main concerns that she is weighing. First, she is not convinced that free trade will be economically beneficial for Developia. Second, she is concerned that other WTO members will “cheat” or “defect” on their commitments by keeping trade protections in place. Despite these concerns, she wants your advice. She has asked you to write a memo answering the following question which will impact her decision:

Focusing your argument on these two concerns, do you think Developia should join the WTO? Why or why not?

Answer 1

First negotiations should be clear like if institution promotes free trade then its Pron and Cons should be kept in mind

• free trade gives a lot of variety and options but on other hand causes competition as level of free entry rises therefore free entry can be a threat to our domestic market.

so to decide whether there should be free trade or not one should examine that if the new entrant is more advanced than local markets or not. There will be a threat if the new comer are more advanced and give a great competition to existing firms.

• there are also chances that members of WTO cheats once come into agreement and that thing thing will result in very time consuming process for eg if any one of the member fails on ts agreement then there will be meeting of all member time consuming process for coming at conclusion and then after deciding penalties and all.

so in short this will create a hastle in the current economy if this thing happens so before taking such a big decision country should be aware of risk of all this as there is no certainity at any point anything can happen.