An Assessment Of WTO Rules And Implications On Nigerian Trade

Project and Seminar Material for International Relations

An Assessment Of WTO Rules And Implications On Nigerian Trade


The study examines the rules and implications of the World Trade Organization on Nigerian trade.

The study has the following objectives; To examine the Implication of World Trade Organization rules on Nigerian trade, To examine the effect of trade liberalization on Nigerian trade.

Concerning methodology, the population for the study was not large, and data could be collected from all the respondents, the researcher adopted the census sampling technique to successfully complete the study. All 65 respondents were used for this study. It also explained the mode of data collection and analysis; Questionnaires were used to sample people’s opinion while carrying out the survey. The researcher discarded the secondary data designs so as to get new, accurate findings and data analysis on the subject matter.

Base on fining the study has the sample size of sixty-five (65). Findings from the study revealed the following; WTO plays a vital role in international trade, WTO rules significantly influences Nigerian Trade, there are laid down rules in world trading, trade liberalization has a positive impact on Nigerian Trade, Nigerian trade has been boosted by the assistance of WTO rules.

Chapter One


1.1 Background to the Study

Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in Africa; its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African sub-region. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry (Adeleyo, 2002).

Nigeria’s trade relations revolve around the oil and natural gas sectors. After the economic reforms of 2005, the government is making efforts to diversify its export profile beyond the oil sector, such as minerals and agricultural products. Oil and natural gas are the most important export products for Nigerian trade. The country exports approximately 2.327 million barrels per day, according to the 2007 figures. In terms of total oil exports, Nigeria ranks 8th in the world. As of 2009, Nigeria has approximately 36.2 billion barrel oil reserves. Prior to oil production, which surged after the 1970s, agricultural production was the largest export sector for Nigeria. After the country became a largely oil-intensive economy, the agriculture sector took a back seat. However, it still provides employment to almost 70% of the total working population.

Due to high international oil prices, Nigeria’s import trade is able to balance export revenue. According to the 2009 figures, the country’s imports grossed over US$42.1 billion. Machinery, heavy equipments, consumer goods and food products are the major imports. A large portion of the imports arrive from the EU, particularly the Netherlands, the UK, France and Germany. China, the US and South Korea are also major import trade partners.

The abolition/review of many restrictive businesses and financial regulations and the Nigeria’s membership of the World Trade Organization (WTO) have enhanced the Nigeria’s position in multilateral trade system. The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade (Weldon, 1999). It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules (Hart, 1997). Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade (santos, 2009). But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.however, all these calls for need for the assessment of the World Trade Organization rules and implications on Nigerian trade.

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system (Adeyemi, 1999).

1.2 Statement of the Problem

Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.

Since, Nigeria registered the world trade organization treaty in December 1994, there has been occasional focus on the economic implication of this treaty for the Nigerian economy. Nigeria registered the WTO treaty in December 1994 and thus became a funding member of the organization in January 1995. The researcher is seeking to assess how Nigerian external trade fared since she became a signatory to the W. T. O. in 1995 and how the adherence to the provisions of the organization affected non-oil exports and trade liberalization in Nigeria. Although, WTO agreements allow countries to introduce changes gradually through progressive liberalization. Developing countries like Nigeria are usually given longer period to fulfill their obligations.

1.3 Objectives of the Study

The following are the objectives of this study:

  1. To examine the rule of the World Trade Organization.
  2. To examine the Implication of World Trade Organization rules on Nigerian trade.
  3. To examine the effect of trade liberalization on Nigerian trade.

1.4 Research Questions

  1. What are the rules of the World Trade Organization?
  2. What are the Implication of World Trade Organization rules on Nigerian trade?
  3. What is the effect of trade liberalization on Nigerian trade?

1.6 Significance of the Study

The outcome of this study will further draw the attention of the government, managers of the economy as well as the general public to the problems associated with the full liberalization of trade. It will also assist policy makers in the choice of policy options as it relates to trade, as issues raised in this study will serve as guide. It will further enhance the available literatures on the trade dynamics between developed and developing countries or between centre states and peripheral states. Finally, it is our hope that the findings of the study will stimulate further researches in this field which will further expand the understanding of the position of third world economies in the global trade system.

1.7 Scope / Limitations of the Study

This study will cover the rules of the World Trade Organization and its implication on both internal and external trade.

Limitation of Study
Financial constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Chapter Five

Conclusion and Recommendation

5.1 Conclusion

This free inflow of imports has tended to hinder the growth of local industries on no small measure. Essentially, the trade liberalization policy has been characterized by number of glaring weaknesses. One of these is the neglect of the need to enhance productivity and another is the over emphasis on currency devaluation without making docognisance of the adverse effects on production and productivity. Furthermore, the “uniformity” of trade liberalization has worked against exports of manufactures while its universality adversely affected export earning from primary commodities. Manufactured exports were handicapped as existing and potential export industries were deprive of scarce imported inputs while imports of other goods, including all kinds of luxury items, tended to flourish. Also, the impact of devaluation on production costs in manufacturing has been very high because of its high import intensity. Thus, the orthodox features of trade liberation have reflected the importance of long run development of supply capacity and the limitation of market forces in building up such capacity

5.2 Recommendations

  1. The study also recommends the provision of a peaceful economic and political environment needed for local and foreign investment. The governments of these SSA countries should provide financial backing in form of easy accessibility to loans (credit facilities to investors) so as to boost local investment coupled with the fact that foreign investors should also be attracted to invest in the country via improving on the state of security and embarking on conducive policies that supports investments. It is when there is huge investment in the economy that the country can experience growth which will improve on the quality of institutions in the SSA countries.
  2. Furthermore, it is also recommended that there is a need to ensure that contracts are made easily enforceable. This is a very important tool that can be used to improve trade liberalization in SSA countries. The reason for this is that it will make the economic agents involved in international trade to be optimistic as they are sure that the moral hazards and adverse selection challenges are reduced. Coupled with this is the fact that the rest of the world will find it easier to trade with countries that are reputed for adequate contract enforcement more than others that are not so reputable. If effective contract enforcement procedures are in place, transaction costs will be reduced and this will eventually improve the level of trade liberalization in the region. Moreover, the governments of the selected SSA countries should encourage exports so as to harness maximum gains from trade liberalization.
  3. Another recommendation the study made is the need to reduce if not totally eradicate ethnic crises in the SSA region. Over the years, some countries in the SSA region have been faced with some ethnic crises which have discouraged Page | 193 foreign investors and hindered trade liberalization. In order to build strong institutions and foster economic growth, there is need to curb ethnic crisis by encouraging peaceful co-existence among the various ethnic groups.

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