Chapter 2 Structures of Globalization
Chapter 2 Structures of Globalization
Chapter 2-Structures-of-Globalization
2. Legal Status
• GATT: GATT was a treaty with no institutional foundation or legal status as an
international organization. It was a series of trade rounds aimed at reducing
tariffs.
• WTO: The WTO is an international organization with a legal foundation, giving
it more enforcement power and formal dispute resolution mechanisms.
3. Scope of Coverage
• GATT: Primarily focused on trade in goods. It dealt mainly with reducing tariffs
and quotas on products.
• WTO: Covers a broader range of trade issues, including goods, services
(through the General Agreement on Trade in Services, GATS), intellectual
property rights (through the Agreement on Trade-Related Aspects of
Intellectual Property Rights, TRIPS), and dispute settlement.
4. Dispute Resolution
• GATT: Dispute resolution under GATT was less formal, and rulings were non-
binding. Countries could easily block decisions.
• WTO: The WTO has a stronger dispute resolution system with binding rulings.
If a member country does not comply with a decision, the affected country may
take retaliatory measures.
5. Membership and Participation
• GATT: GATT was a provisional agreement with 23 original signatories. Over
time, more countries joined, but the rules were more limited and often applied
selectively.
• WTO: The WTO is a full-fledged organization with over 160 member countries.
It has a more inclusive approach, requiring members to accept all agreements
under its umbrella.
6. Decision-Making
• GATT: Decision-making under GATT was mostly consensus-based but
informal, with limited enforcement mechanisms.
• WTO: The WTO follows a more formal decision-making process and has a
more structured organization, with specific bodies dealing with various trade
issues.
7. Duration
• GATT: Operated from 1948 to 1994, functioning as a temporary agreement that
was meant to be replaced by the International Trade Organization (ITO), which
never materialized.
• WTO: Established in 1995 and is an enduring organization with broader powers
and responsibilities.
Market Integration
• Market integration refers to the process by which separate national markets
become increasingly interconnected and interdependent, forming a global market.
Key Concepts:
• Trade Liberalization: The reduction or elimination of tariffs, quotas, and other
trade barriers to allow for the free flow of goods and services.
• Capital Mobility: The ease with which capital or investment funds can move
across borders, enhancing global investment opportunities.
• Technological Advances: Innovations in transportation, communication, and
information technology have facilitated market integration.
• Regional Integration: Formation of economic blocs and agreements like the
European Union (EU) and the North American Free Trade Agreement (NAFTA) to
promote regional economic ties.
Stance on Global Economic Integration:
• Pros: Economic growth, job creation, access to new markets, technological
advancement, and improved living standards.
• Cons: Economic inequality, cultural homogenization, environmental degradation,
and the erosion of national sovereignty.
A balanced approach is needed to maximize benefits while mitigating negative impacts.
Important Points to Remember:
• Market integration leads to economic efficiency and access to larger markets but
can also result in increased competition and economic inequalities.
• It is driven by both economic policies and technological developments.