7.4 World Trade Organisation Explain free trade Evaluate free trade Understand role of WTO

FREE TRADE – an absence of tariffs, quotas and regulations designed to reduce or prevent trade among nations. Opposite of protected trade. Historically in 1930’s countries used to deal with recession by imposing barriers to trade- but this made it more difficult to recover. Although there is free trade now there are still protectionist measures in place for countries.

BENEFITS OF WTO More choice of goods at the lower price possible. Increased competition encourages firms to innovate. Exports of goods and services will increase economic growth. Encourages efficiency. Increases world output and wealth.