World trade is defined as an agreement between two or more nations that may operate their business in different parts of the world. This business is done by importing and exporting goods and services. In short, buying and selling of products and services irrespective of national boundaries.
Given below are five elements that make international trades possible −
It is not possible for any country to fulfill all its needs by itself. International market is a channel through which nations source the products and services they lack or do not have in sufficient quantities. Apart from this, international politics play a pivotal role in achieving, promoting or maintaining peace between international trading partners or nations.
The WTO regulates international trade, formulates tariffs globally, and also resolves conflicts among member countries.
The major functions of WTO are as follows
To facilitate the implementation, administration and operation and further the objectives of this Agreement and of the Multilateral Trade Agreements, and also provide the frame work for the implementation, administration and operation of the multilateral Trade Agreements.
To provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement.
To administer the Understanding on Rules and Procedures Governing the Settlement of Disputes.
To administer Trade Policy Review Mechanism.
To cooperate, as appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies with an aim to achieve greater coherence in global economic policy making.
The WTO helps maintain peaceful trans-boundary trades and also resolves the conflicts among the participating countries. It is not possible to imagine international trade in the absence of WTO. All the participating nations are bound to abide by the protocols set by WTO.