The World Trade Organization, like many multilaterally functioning institutions, has a storied history. In their recent working paper, "The WTO in Theory and Practice," Kyle Bagwell and Robert W. Staiger, explain now the General Agreement on Tariffs and Trade (GATT), which would be later become the WTO, was carefully built to be one of the most successful international organizations ever created. The authors of this article surveyed existing theories of trade agreements, which showed that these agreements would work only if a proper solution could be gained from their formation. All theories of trade agreements were noted to have identified a reason for what negotiating governments could gain from the agreements. However, the analysis shows that terms-of-trade rationale has been found to hold when governments have political motivation.
The WTO in Theory & Practice Frances Kim Yale Economic Review; Winter 2010; 6, 1; Docstoc pg. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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