CHAPTER ONE
INTRODUCTION
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).