The rules include commitments not to backslide into unwise policies. Protectionism in general is unwise because of the damage it causes domestically and internationally.
Particular types of trade barriers cause additional damage because they provide opportunities for corruption and other forms of bad government.
One kind of trade barrier that the WTO’s rules try to tackle is the quota — for example, restricting imports or exports to no more than a specific volume each year.
Because quotas limit supply, they artificially raise prices, creating abnormally large profits for companies selling inside this quota (economists talk about “quota rent”). Such circumstances create serious market distortions and these extra profits can be used to influence policies because more money is available for lobbying. These conditions can also provide opportunities for corruption — for example, in the allocation of quotas among traders. That is unfortunately all too common around the world.
In other words, quotas are a particularly bad way of restricting trade. Governments have agreed through the WTO’s rules that their use should be discouraged.
settle disputes and reduce trade tensions
More trade, more traded goods and services and more trading countries — they bring benefits but they can also increase the potential for friction. The WTO’s system deals with these in two ways.
One is by talking: countries negotiate rules that are acceptable to all.
The other is by settling disputes about whether countries are playing by those agreed rules.