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HOW DO INTERNATIONAL AGREEMENTS AND ORGANIZATIONS CONTRIBUTE TO EXPANDING GLOBALIZATION? A key element in expanding globalization is reducing trade barriers so that goods and services can move around the world easily. This process is called trade liberalization. To achieve this goal, countries must get rid of measures — such as tariffs, quotas, regulations, and standards — that protect and regulate businesses and industries within their borders. When two countries agree to eliminate all tariffs and taxes on goods and services traded between them, the result is free trade. In theory, free trade is reciprocal. Businesses and industries in both countries benefit because they can sell their goods or services in the other country. Local companies can expand into new markets. This creates jobs, uses resources, and reduces the cost of consumer goods. Examine Figures 10-10 and 10-11, which show how liberalizing trade in clothing affected Canada and other countries. Who do you think benefited and who was harmed by this action? The World Trade Organization The World Trade Organization was established in 1995 to increase international trade by lowering trade barriers and making trade more predictable. The WTO ensures that the terms of trade agreements are followed, settles trade disputes between governments, and conducts trade negotiations. Decisions made by the WTO are binding — member countries must abide by its rulings. The WTO officially has a one-country, one-vote system, but in practice, decisions are made by coming to a consensus — a general agreement. All members must support a consensus decision. Why might the WTO’s members have chosen this method of making decisions? Why might a yesor-no vote not work as well at the WTO? Building consensus often means that it takes a long time to reach a decision, and in an effort to satisfy the concerns of everyone involved, final agreements sometimes end up using language that is open to interpretation