International Trade Regulations Refer to a Set

International trade regulations refer to a set of codified rules and laws that manage, control and regulate all types of trade among different countries of the world. Based on the theory of economic liberalism, these regulations came into existence in the backdrop of World War II. General Agreement on Tariffs and Trade (GATT) was the first multilateral treaty formed to regulate the rapidly rising trend of cross border trade.

The fast economic and industrial growth in Europe and America and expanding world markets created the need for a full-fledged organization to manage international trade. Thus, World Trade Organization (WTO) was established in 1995 under the "Marrakesh Agreement."

The WTO aimed at arbitrating bilateral and multilateral trade agreements, formulating and implementing trade mechanism, promoting free trade around the globe and solving tariff and non-tariff hiccups in international trade.

The world trading system is based on the notion that economic relations form an integral part of foreign policy, and national economies are interdependent on one another (Jackson, 1997). James Forrestal once told, "For the only way in which a durable peace can be created is by world-wide restoration of economic activity and international trade."

The proponents of the New World Order, formed in 1990s, are of the view that international trade should be based on free market economy- a system in which all nation states can participate without tariffs and embargos disputes.

With the dawn of the 21th century, international trade gained some new dimensions and trends which made the job of the WTO tougher. China, with the souring economic development, emerged as a new potential competitor, triggering the disputes like tariff settlements and currency manipulation.

As regionalization was a key part of the post-cold war era, there came a surge in the Regional Trade Agreements (RTAs) in 1990s (Crawford and Laird, 2000). This is evident from the fact that around about 500 RTAs are registered with the WTO currently, and many are under consideration. The major part of these RTAs consists of Free Trade Agreements (FTAs).

The mushrooming growth in the RTAs has made the world trade regimes and regulations more complex, and, on some occasions, there comes about a clash between the RTAs and international trade agreements. However, the WTO manages to maintain a balance between these two systems.

The biggest RTAs of the modern era include European Free Trade Agreement (EFTA), Mercosur Regional Trade Organization and African Regional Trade Agreements (ARTAs)-out of the three, the EFTA poses to be more effective and successful.

The EFTA is a common treaty among 27 members of European Union (EU) based on single market, free trade and single currency. This RTA has helped a lot in perking up the economies of all the member states.

The AFTA covers all the members of the African Union (AU); however, unlike EFTA, it has certain limitations, thanks to the variable geometry. James Thuo Gathii, in his book 'African Regional Trade Agreements as Legal Regimes', has termed the AFTA as a flexible regime (Gathii, 2011).

Mercosur Regional Trade Organization, formed in 1991, regulates the RTAs among the Latin American states including Argentina, Brazil, Venezuela, Chile, Peru, Colombia and Ecuador (Crawford, 2000). Along with practicing free trade in the region, this organization is working with EU to promote inter-regional trade regimes.

The three above-mentioned RTAs are working as role models for the other regional organization of the world including South Asian Association for Regional Cooperation (SAARC) and Association of South East Asian Nations (ASEAN). These two Asian regional cooperation organizations have awakened to meet the challenges of the modern economic system by forging trade ties among the member nations.

With the rise of the international trade regimes and RTAs, there emerge some disputes too among the trading partners. In order to solve these disputes and ensure smooth trade across the globe, the WTO has a comprehensive dispute settlement system which attempts to arbitrate rapprochements and fix problems that hamper international trade.

The major challenge to the GATT/WTO dispute settlements system stems from confrontation between national sovereignties of the member states and trade regulation laws as the governing body has to respect and ensure the both (Yerxa, 2005). Since the inception of its dispute settlement system in 1995, the WTO has solved many disputes successfully.

However, the issue of creditability of WTO's dispute settlement system has been raised and discussed on many forums. The world trade experts argue that the basic tires of the system including court and Appellate body should be absolutely free from the pressures of the other member states of the organization. Most of the time, the underdeveloped Asian nations complain that the EU and American states excert their undue influence on the WTO.