Theoretical Justification of Regulating International Trade and the Implications for Developing Countries

Abstract

The theory of comparative advantage has been advocated to justify the immense benefits that accrue to nations in international trade and the proposition is assumed to be without contention. Mutual benefits from trade however become practicable when there is a fair rules-based system that regulates the conduct of trade. In effect, benefits from international
trade go as far as the rules under which the international trade regime is organised. The World Trade Organization (WTO) is the main regulator of international trade, and the operating rules and systems require periodic analysis and justification. Through a reflective method of analysis, the theoretical justification of the WTO principle of non-discrimination and the impact on ensuring a fair system of international trade was examined and the policy implication for developing countries discussed.