World Trade Organization (WTO)

Definition

The WTO is an international organization that deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

Analogy

Think of the WTO like a referee in a soccer game. Just like how the referee ensures all players follow the rules and play fairly, the WTO makes sure all countries are trading fairly and following agreed-upon rules.

Related terms

Trade Agreement: A contract between two or more nations outlining how they will work together to ensure mutual trade benefits.

Tariff: A tax imposed on imported goods and services. It's one of the tools countries can use to control their trade policies.

Free Trade: An economic policy allowing for unrestricted import and export of goods among countries. It's like playing a game without any barriers or restrictions.