Reader’s Note: This is only just a preliminary study on the global trading system. Not for the business background personnel. But still, you can read and make any comment if I am wrong or anything to add more.
Supply and demand is the main element that triggers us to enter any trade. When local trade can’t satisfy our needs we are seeking global trade.
The global trading system refers to the network of institutions, agreements, and processes that regulate international trade between countries. It encompasses the rules, policies, and practices that govern the exchange of goods, services, and capital between countries, and the organizations responsible for enforcing these rules.
The global trading system has evolved over the past several decades and is now primarily governed by the World Trade Organization (WTO), which was established in 1995 to oversee and liberalize international trade. The WTO sets rules for trade and provides a forum for countries to negotiate trade agreements, resolve disputes, and discuss trade policies.
One of the key features of the global trading system is its focus on promoting free trade, which is the idea that countries should be able to buy and sell goods and services with each other with as few barriers as possible. This includes reducing tariffs (taxes on imported goods), eliminating trade barriers, and providing a level playing field for companies operating in different countries.
The global trading system also plays a crucial role in promoting economic growth and development, as it allows countries to specialize in the production of goods and services in which they have a comparative advantage, and then trade those goods and services with other countries. This leads to increased efficiency, lower costs, and improved living standards for people around the world.
Overall, the global trading system is a complex and dynamic system that plays a critical role in shaping the global economy. It provides a framework for international trade and helps to ensure that trade is conducted fairly and efficiently, promoting economic growth and development around the world.
