The WTO does promote trade: Aggregate and specific sector level analysis

This dissertation examines the effects of the General Agreement on Tariffs and Trade (GATT), and World Trade Organization (WTO) on aggregate trade level and sectoral level trade. For decades, oil, agricultural and textiles products trade have constituted very contentious issues at the GATT/WTO.; The first part of the dissertation focuses on the effect of oil trade on the effectiveness of the GATT/WTO in promoting world trade. In order to accurately evaluate the role of the trade organization in trade promotion, only trade in commodities and sectors that are actually under the influence of that organization should be taken into account. Therefore, in this chapter, we exclude oil trade from consideration, as it is not dealt with under GATT/WTO rules.; We apply an extended gravity model to annual bilateral total and non-oil trade data. With this exclusion, the magnitude of the estimated parameters changes considerably and results are that GATT/WTO promotes trade by about 23 percent between member countries and by about 13 percent for trade with non-member countries. These results are consistent with the goals and objectives of the GATT/WTO. This chapter, therefore, confirms the widely-held belief of the economic importance of the GATT/WTO in the promotion and liberalization of world trade.; The second part of the dissertation examines the role of agricultural , and textiles and clothing trade on the effectiveness of the GATT/WTO in promoting world trade. Many governments support and protect their agricultural sector even though this distorts that trade. The textiles sector has been governed by special regimes: the Short Term Cotton Arrangement (STA), the Long Term Cotton Arrangement (LTA), and the Multifibre Arrangement (MFA). For these reasons, agricultural and textiles trade are largely not influenced by the GATT/WTO. However, we find that trade in these two sectors had no significant effect on the role of the GATT/WTO in promoting world trade. In addition, subtracting the amount of either or both sectors from the total trade has no effect on the effectiveness of GATT/WTO in promoting trade, so long as oil trade is still included in total trade.