Quiz Essay Example | Topics and Well Written Essays - 250 words - 3

Quiz - Essay Example Since its creation, the WTOs focus has shifted from public interest goals to ones dealing primarily with the liberalization of trade, helping trade flow as freely as possible. The philosophy of the most favored nation (MFN) is an outcome of the WTO agreements, what it implies is that if a country was to give preferential treatment to any one country with regard to any trade related issues, it was to treat all members equally regarding the same issue. Originally the MFN clause was included in bilateral trade agreements; however, several steps which limited the functioning of the MFN principle were taken in the1930s which led to the division of the world economy into a number of separate trade blocks. After going through this ordeal the WTO introduced MFN in the form of a multilateral reciprocal relationship. Ans: A customs union (CU) is a kind of trade bloc or a form of trade agreement under which the members preferentially grant limited or a tariff free market which allows access to each other’s import while upholding a common set of external tariffs to the imports from the non-member nations. Jagdish Bhagwati, who is known for his espousal of free global trade, would not be in favor of forming such a union as in such a situation, whether a country is part of the union or not, it is worse off than before. He is known to have criticized the foundations on which customs unions function for instance proximity of the trading nations & the volume of trade criterion. We should note however that formation of a custom union is the transition period between two states of trading equilibrium. Given any initial trading equilibrium, there exists a series of steps, and at each of these steps either new customs unions are created or the older unions are enlarged this happens due to the innate nature of the negative impact the unions create that in order to ensure that no member is harmed there is need to expand continuously ,ultimately leading to