The World Trade Organization (WTO):
a. is an agency providing insurance to firms involved in international trade.
b. seeks to facilitate the flow of trade by establishing agreements on potential trade barriers.
c. has successfully rid international trade of tariffs.
d. is a general international antitrust agreement.
The correct answer and explanation is:
The correct answer is b. seeks to facilitate the flow of trade by establishing agreements on potential trade barriers.
The World Trade Organization (WTO) is an international organization that aims to promote and facilitate global trade. It does this primarily by creating and enforcing agreements between member countries regarding trade rules and regulations. The WTO helps manage international trade by overseeing trade negotiations, resolving disputes, and monitoring trade policies to ensure they comply with the established agreements.
The organization was created in 1995 and replaced the General Agreement on Tariffs and Trade (GATT), which was established in 1947. While it does not provide insurance to firms (as described in option a), it does offer a platform for countries to negotiate trade agreements. The WTO works to reduce trade barriers such as tariffs, quotas, and subsidies, which can distort global markets and hinder the flow of goods and services between nations. However, it has not completely rid international trade of tariffs (as option c suggests). Tariffs still exist, but the WTO has played a significant role in reducing them over time.
Furthermore, the WTO is not an antitrust agreement (as option d suggests). Antitrust laws are typically enforced within national borders to prevent anti-competitive practices. The WTO, on the other hand, focuses on international trade issues and aims to create a more level playing field by encouraging fair trade practices among its members.
In essence, the WTO’s role is to foster a smooth flow of trade across borders by helping to resolve disputes, lowering trade barriers, and ensuring that countries adhere to agreed-upon trade rules, which strengthens the global economy.