There are different types of economic integration around the world, from free trade agreements in which participants mutually allow each other imports without tariffs or quotas, through common markets where participants have a common trade policy and free trade within the group, to comprehensive economic unions that coordinate, in addition to a common market, monetary and fiscal policy. Many nations are part of both the World Trade Organization and regional trade agreements. The World Trade Organization (WTO) was officially established in 1995, but its history is much longer. In the years following the Great Depression and World War II, there was a global breakthrough in building institutions that would connect the nations of the world. The United Nations was officially established in 1945. The World Bank, which helps the world`s poorest, and the International Monetary Fund, which deals with issues raised by international financial transactions, were both established in 1946. The third organization envisaged should be an international trade organization, which should manage international trade. The United Nations disagreed. Instead, the General Agreement on Tariffs and Trade (GATT) was established in 1947 to create a forum that allowed nations to come together to negotiate tariff reductions and other trade barriers.
In 1995, the GATT was transformed into a WTO. Trade policy is determined at many levels: administrative authorities in government, laws passed by the legislature, regional negotiations between a small group of nations (sometimes only two) and global negotiations on the World Trade Organization. During the second half of the 20th century, trade barriers declined significantly in the U.S. economy and in the global economy in general. One of the reasons countries sign international trade agreements to engage in free trade is to protect themselves from their own special interests. When an industry commits to protecting foreign producers, policy makers may indicate that they have their hands tied by the trade agreement. The slow pace of the GATT negotiations gave rise to an old joke that GATT was really synonymous with gentleman`s Agreement to Talk and Talk. However, the slow pace of international trade negotiations is understandable, if not reasonable.
Dozens of nations have approved any treaty, is a long process. GATT has often established separate trade rules for certain economic sectors, such as agriculture, and for some countries such as low-income countries. There were rules, exceptions to the rules, ways to unsubscribe from the specific rules and formulations that we would have to fight for. Like the previous GATT, the WTO is not a world government empowered to impose its decisions on others. The total staff of the WTO in 2014 is 640 people and its annual budget (in 2014) is $197 million, making it smaller than many major universities. The best known of these regional trade agreements is the European Union. In the years following The Second World War, the leaders of several European nations argued that if they could strengthen ties between their economies, they might be more likely to avoid another devastating war. Their efforts began with a free trade association, became a common market, and then turned into a comprehensive economic union today, called the European Union.