How WTO can impact consumers

WTO can reduce the cost of production by reducing the cost of products imported, reduce prices of finished goods and services and ultimately a lower cost of living.


Parag NarangParag Narang | Updated: 15-03-2018 17:22 IST | Created: 15-03-2018 17:13 IST
How WTO can impact consumers
WTO has been in place for over 70 years now. (Image Credit: Reuters)

The World Trade Organisation(WTO) works under the principle of non-discrimination and using its global system lowers trade barriers through negotiation.

By using these practices, WTO can reduce the cost of production by reducing the cost of products imported, reduce prices of finished goods and services and ultimately a lower cost of living.

Here we see what impact WTO has on consumers,

  • Rise in income level: US annual incomes have been boosted by USD 9,000 per household since Trade opening in 1945. The WTO Uruguay Round and the North American Free Trade Agreement alone boosted purchasing power by USD 700 per year in an average American family of four in 1990.
  • Cheaper Basic Necessities: Basic necessities like food will get cheaper by protecting agriculture. Protecting agriculture raised food prices by an estimated $1,500 per year for a family of four in the European Union in 1997 and by the equivalent of a 51% tax on food in Japan (1995).

          But protection and subsidies force down or raise prices globally that might not be needed.

          WTO has the power of bringing down the price of clothing and related items by changing the trade costs.

Import restrictions and customs duties raised clothing prices in the USA by 58 per cent in late 1980s. If customs duties on textiles and clothing were also to be eliminated, economists calculated that the result could be the gain to the world of around USD 23 billion.

  • High tariffs often impact poor people: Higher tariffs charged on a number of products including those purchased by all the sections of the society like Clothing, spare parts often hurt the poor and the economy.

 

A good example of this is the recently introduced tariffs by Donald Trump, although it had no inclusion of WTO, can hurt the economy worldwide.

WTO has been in place for over 70 years now and trading barriers around the world are lower than ever been in modern trading history. We continue to benefit from it as they continue to fall.

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  • Devdiscourse News Desk
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