General Agreement on Tariffs and Trade (GATT)

10 Key excerpts on "General Agreement on Tariffs and Trade (GATT)"

• 

  eBook - ePub

  International Institutions in Trade and Finance

  • A. I. MacBean, P. N. Snowden(Authors)
  • 2021(Publication Date)
  • Routledge

    (Publisher)

  The General Agreement on Tariffs and Trade (GATT)

  The main objectives of the GATT are the reduction of tariffs, the prohibition of quantitative restrictions and other non-tariff barriers to trade and the elimination of trade discrimination. In addition Part IV of the agreement, added in 1965, extended these objectives in the interests of the less developed countries to include efforts to stabilise commodity prices and to give better access to the markets of the developed countries for exports from developing countries.

  The purpose of this chapter is to evaluate the GATTs contribution towards attainment of these objectives and, more broadly, to consider the GATT’s overall contribution to world economic welfare in the past and its potential contribution in the near future. The world economy has changed in many ways since the inception of the GATT. The key question is whether the GATT remains relevant or not.

  The GATT Approach

  The GATT fulfils several functions. It provides:

  1. a set of agreed rules to govern trade between nations;
  2. rules and procedures to facilitate and discipline negotiations between nations on trade and commerce;
  3. a forum for international multilateral negotiations on trade as well as for the day-to-day bilateral negotiations and conciliation meetings which form a large part of the normal work of the GATT;
  4. a small but highly skilled and experienced secretariat which can assist in all these matters through research and documentation of the issue and by the exercise of leadership and diplomacy.

  Rules

  The General Agreement is a very complex, detailed and technical document which sets out the rules for the conduct of trade between the members and the many exceptions to these rules which political necessity requires. However, three rules and their exceptions are of particular importance. The first is the rule against discrimination in imports or exports. This is the most favoured nation (MFN) clause of the agreement which we quoted in Chapter 1

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  The Economic Factor in International Relations

  A Brief Introduction

  • Spyros Economides, Peter Wilson(Authors)
  • 2001(Publication Date)
  • I.B. Tauris

    (Publisher)

  IMF, and thus could not interfere with the freer flow of trade that would be of mutual benefit to all participants in the long-term. GATT comprised two main components: the general code of trade practice and norms of behaviour, and a specific list and schedule of tariffs covering hundreds of thousands of goods. The three main principles of GATT were: non-discrimination through the most-favoured nation principle, which stipulated that any concessions on tariffs on particular goods from a particular state would have to be extended to all signatories; reciprocity, which stipulated that if a state reduced its tariffs on another state’s goods, this must automatically be reciprocated by the second state; transparency, which stipulated that all NTBs, such as quantitative restrictions and quality controls, should be replaced by the uniform measure of tariffs, which are much easier to monitor and ultimately, therefore, to reduce. The centrality of tariffs to GATT is evident in the three principles outlined above. The idea was to promote the reduction of tariffs and the fair treatment of fellow signatories of GATT in an open and accountable way. But what is a tariff and what does it do? A tariff is a duty or custom (essentially a tax), levied on an import or paid on an export. One purpose served by tariffs is to generate revenue for the state without direct taxation of citizens. This was especially true of past periods, when direct taxation was not widespread or revenues were difficult to collect, and it still features as a central source of govern-ment revenue at the turn of the twenty-first century in countries like Russia. Another purpose served is in protecting and promoting domestic manufactures by making foreign imports artificially expensive and thus pricing them out of the market.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Self-Enforcing Trade

  Developing Countries and WTO Dispute Settlement

  • Chad P. Bown(Author)
  • 2010(Publication Date)
  • Brookings Institution Press

    (Publisher)

  What is clear is that the level of tariffs during the Depression was much higher than what most developed economies impose today. At the conclusion of World War II, twenty-three countries, led primarily by the United States, Canada, and the United Kingdom, negotiated the General Agreement on Tariffs and Trade. 1 The goal was to create an agreement that would ensure postwar stability and avoid a repeat of the mistakes of the recent past, including the Smoot-Hawley tariffs and retaliatory responses, which had been a contributor to the devastating economic climate that culminated in the death and destruction of the Second World War. The 1947 GATT created a new basic template of rules and exceptions to regulate international trade between members (referred to as contracting parties ) and locked in initial tariff the wto and gatt 11 1. The twenty-three countries engaging in the Geneva negotiations that led to the signing of the GATT in 1947 were Australia, Belgium, Brazil, Burma (Myanmar), Canada, Ceylon (Sri Lanka), Chile, China, Cuba, Czechoslovakia (Czech Republic and Slovakia), France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, South Africa, Southern Rhodesia (Zimbabwe), Syria, United Kingdom, and United States. For a discussion of the negoti-ating history leading up to the GATT, see Irwin, Mavroidis, and Sykes (2008). reductions that these countries committed to establish. Even as early as 1952, the tariff cuts had reduced average tariffs substantially, as shown in table 1-1, for a number of these countries. Over the next forty-seven years, more countries signed on to the GATT, and further trade liberalization negotiations ensued. 2 As table 1-2 documents, between 1947 and 1994, the GATT contracting parties began and concluded eight sepa-rate negotiating rounds of voluntary trade liberalization. The last of these com-pleted rounds was the Uruguay Round, which ended the GATT era in 1994 by ushering in the World Trade Organization.

  Sign up to read

  Learn more about book
• 

  No longer available |Learn more

  Case Studies in US Trade Negotiation

  Resolving Disputes

  • Charan Devereaux, Robert Z. Lawrence, Michael D. Watkins(Authors)
  • 2006(Publication Date)
  • Peterson Institute for International Economics

    (Publisher)

  But because of opposition in the US Congress, the charter was never ratified. Instead, until 1994, the trading system operated on the basis of the GATT. Given its original role as a provisional agreement, it is quite un-derstandable that the GATT had a narrow mission focused on border bar-riers and a weak system for settling disputes and ensuring compliance. According to its preamble, the purpose of the GATT was “to enter into reciprocal and mutually advantageous arrangements directed to the sub-stantial reduction of tariffs and other barriers to trade and to the elimina-tion of discriminatory treatment in international commerce.” The GATT sought to eliminate discriminatory treatment by requiring most favored nation (MFN) treatment of all members (Article I) and national treatment for imported goods (Article III). The agreement did not compel harmo-nized standards or policies; it simply required that domestic and im-ported goods be treated in the same way. Provided they respected this principle, GATT signatories (known as “contracting parties”) remained free to implement any domestic policies or rules they desired. Policies re-lating to measures such as standards and intellectual property were not covered by the GATT’s disciplines. The GATT was remarkably successful. Its membership grew from the 23 countries that drew up the original agreement to the 123 countries that became charter members of the WTO. During the GATT years, the vol-ume of world trade increased more than thirteenfold. 2 In addition, tariffs came down steadily. The first seven rounds of GATT negotiations lowered average tariffs on industrial products from about 40 percent in 1947 to 4.7 percent in 1994. 3 But increased trade and decreasing tariffs led to new pressures on the system. As the world economy became more integrated, there were grow-ing calls for more governance. Complex cross-border economic activities required more secure frameworks in which to operate.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  The Social Foundations of World Trade

  Norms, Community, and Constitution

  • Sungjoon Cho(Author)
  • 2014(Publication Date)
  • Cambridge University Press

    (Publisher)

  3 WTO, “The World Trade Report 2007” (2007), pp. 207, n.53, 209. 1 scientists and legal scholars alike have long regarded the world trading system, represented by the General Agreement on Tariffs and Trade (GATT) and more recently the World Trade Organization (WTO), as a contract among its sovereign signatories. 4 The GATT members in fact labeled themselves as “contracting” parties. The chief goal of this world trade contract is to liberalize trade and to monitor protectionism. The contract model makes sense at least for the following three reasons. First, reciprocal bargains on tariff reduction have historically been a main engine for market opening, as discussed above. Second, this agency-oriented model enables scholars to build sophisticated theories using various econo- metric methodologies (models). Third, traditional public international law also deems a treaty, such as the GATT and the WTO, a sovereign contract, as stipulated in the Vienna Convention on the Law of Treaties. 5 However, the traditional state-to-state contract model has recently become anachronistic as it hardly captures the new pattern of trade. The prototypical GATT was based upon single-country production, a “monolocation production” model of trading patterns, while the con- temporary equivalent is, by far, more complex, as it involves value-added production in multiple countries, that is, a “multilocation production” model. 6 Until relatively recently, most products were harvested or man- ufactured entirely in a single country and shipped to another country. For example, if Argentina produced and shipped wheat to England, this trade was understood as if Argentina exported and England imported. Under this unsophisticated trading paradigm, trade policies were prone to capture by domestic producers, as trading nations competed against each other to maximize net exports (exports minus imports).

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  The United States, the European Union, and the Globalization of World Trade

  Allies or Adversaries?

  • Thomas C. Fischer(Author)
  • 2000(Publication Date)
  • Praeger

    (Publisher)

  Part IV "Globalizing" Trade This page intentionally left blank Chapter 14 Metamorphosing the GATT: The World Trade Organization (WTO) Prior to World War II, international trade was conducted primarily through trading blocs—among countries with similar economic systems and com- plementary needs. There was no true "global" trade. In their zeal to com- pete, these blocs eventually became military blocs, and World War II began. 1 After the war, international trade continued to be compartmentalized. There was no central authority and no agreed-upon or enforceable rules. The Bret- ton Woods/GATT conference was supposed to provide such a mechanism— the International Trade Organization (ITO). But the U.S. Congress op- posed the ITO, because it didn't want America's trade practices policed by others. The U.S. wanted to do the policing and so the ITO never was created. In its place was the General Agreement on Tariffs and Trade, known as the GATT. But the GATT had no enforcement power and was never meant to be as far-reaching as it became by the end of the Uruguay Round (1993). The trading rules of the GATT are negotiated in sessions called rounds. The first GATT round was concluded in 1947, involved 23 nations and covered about one-half of world trade in goods. The next round, in 1949, involved only thirteen nations. From then until 1964, there were periodic renegotiations of the GATT, involving anywhere from 26 to 38 nations. The latest GATT round (the Uruguay Round), the eighth overall, was con- cluded on December 15, 1993, and signed into force in March 1994. It involved 117 nations and took seven years to complete (1986-1993). More- over, it did not address just tariff barriers (as past GATT agreements had) but added trade in services, intellectual property, textiles and agriculture. The number of nations involved in this international agreement is sur- prising enough, but the amount of trade regulated by the GATT is truly

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Domestic Interests and International Obligations

  Safeguards in International Trade Organizations

  • Irving B. Kravis(Author)
  • 2017(Publication Date)
  • University of Pennsylvania Press Anniversary Collection

    (Publisher)

  The General Agreement on Tariffs and Trade 77 EFTA members to eliminate barriers to trade. Owing to this exclusion, the other G A T T signatories contended, it could not be maintained that duties and other restrictive regulations were being eliminated on substantially all trade; conse-quently, the E F T A could not qualify as a free-trade area under Article 24. The seven E F T A members considered that the bilateral agricultural agreements between members pro-vided for in the Convention facilitated the expansion of trade in agricultural products. They argued that the trade conducted under these agreements should be included, to the extent that it represented trade freed of barriers, in determining whether duties and other restrictions had been eliminated on substan-tially all trade. The reply was that the agreements that had been concluded to date had provided for the removal of tariffs only in the case of a small number of products. Furthermore, the removal was only to be effected by one member, an arrangement that did not conform to Article 24. This and other provisions of some of the agreements, particularly non-tariff provisions that seemed intended to increase the share of one of the members in the market of another, were regarded as violations of the most-favored-nation principle of G A T T . Particularly when account was taken of the inclusion in E F T A of countries that were not signatories of G A T T , some thought that the Stockholm Convention could be considered under Article 24 only by invoking the provisions of Paragraph 10 relating to free-trade areas or customs unions that do not fully comply with the other clauses of Article 24. Others took the view that the provisions of Article 24 were not applicable and that the E F T A countries should seek a waiver.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Energy Security

  The External Legal Relations of the European Union with Major Oil and Gas Supplying Countries

  • Sanam S. Haghighi(Author)
  • 2007(Publication Date)
  • Hart Publishing

    (Publisher)

  It should be clarified when and how these activities would distort trade. This issue is analysed with respect to the activities of Saudi Arabia and their production of energy, as it creates a peculiar and complex case where the inadequacies of the GATT rules on these issues are revealed. 5.4.8. The Agreement on Technical Barriers to Trade The Agreement on Technical Barriers to Trade (TBT Agreement) came into existence in order to prevent the use of barriers that adversely affect the free flow of goods through protection of domestic producers to the disadvantage of importers, and tends to prohibit technical regulations, 234 standards 235 and con-formity assessment procedures 236 that could be imposed by importing countries or non-governmental bodies, 237 for reasons other than protection of human health or safety, national security requirements, prevention of deceptive prac-tices, animal or plant life or health, or the environment. 238 For energy purposes, the complexity of technical regulations, standards and procedures necessitated a comprehensive set of provisions to be applied to the energy sector. The abolition of restrictions embodied in GATT is not adequate to guarantee the free flow of energy, and the regulations based on which, for example, electricity is transmit-ted, should also be reviewed to determine their effect on free trade in electricity. 233 See below, section 5.4.9. 234 Technical Regulations are defined as documents that lay down product characteristics or their related processes and production methods , including the applicable administrative provisions, with which compliance is mandatory . See the TBT Agreement, Annex 1, Para 1. See also Arts 2.3 of the TBT Agreement. 235 Standards are documents approved by a recognised body that provides, for common and repeated use, rules, guidelines, or characteristics for products or related processes and production methods, with which compliance is not mandatory .

  Sign up to read

  Learn more about book
• 

  No longer available |Learn more

  Business Guide to the World Trading System

  • International Trade Centre(Author)
  • 2000(Publication Date)
  • United Nations Publications

    (Publisher)

  These policies, apart from reducing trade opportunities for competitive foreign producers, also put heavy burdens on the budgetary resources of governments. This was inevitable, as the high cost of production in excess of domestic requirements could be disposed of in international markets only through export subsidies. Developing countries also protect their agricultural sector by imposing high tariffs and restrictions on imports. Border measures Tariffication Agreement on Agriculture, Article 4 and footnote 1 The most important aspects of the Agreement on Agriculture are the new rules. These require the countries which applied non-tariff measures (such as quantitative restrictions, discretionary licensing and variable levies) to abolish them by calculating their tariff equivalents and adding these to the fixed tariffs. As a result, countries have established new rates of tariffs for products (mostly temperate zone) to which they previously applied non-tariff measures. The tariff equivalent of non-tariff measures was calculated on the basis of average world market prices for the product subject to non-tariff measures and its internal price in the importing country. 172 Chapter 15 – Agreement on Agriculture © International Trade Centre and Commonwealth Secretariat 2003 The obligation to tariffy quantitative restrictions was however not applicable to restrictions maintained by developing countries in balance-of-payments difficulties under the provisions of GATT 1994. Current and minimum access commitments Exporting countries were apprehensive that, for some products the imports of which were restricted by quantitative restrictions or variable levies, there was a danger that the tariffication process by itself would not have a significant liberalizing effect. The use of current and minimum access commitments was therefore adopted to complement the tariffication process.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  International Transactions In Services

  The Politics Of Transborder Data Flows

  • Karl P Sauvant(Author)
  • 2020(Publication Date)
  • Taylor & Francis

    (Publisher)

  Since this approach would, however, diffuse GATT's role considerably, it is very likely to encounter strong opposition from developed countries. Be that as it may, it is clear that a formula has to be found which accommodates both the resistance of developing countries to have the GATT framework applied to services, and the insistence of the developed countries to have service-trade matters negotiated in GATT. Indications are that a face-saving formula will be found which permits GATT to negotiate a framework for trade in services. It would not be surprising if this matter were only to be resolved in dramatic final moments of the preparatory process, and if it were to be facilitated by a number of concessions on the part of developed countries (e.g., standstill, the inclusions of agriculture in the round and perhaps even a commitment to phase out voluntary export restraint agreements). 286 International Policy Discussion: International Fora Whatever the formula, it is not likely that the US (and, for that matter, other developed contries) will agree to any package reached in the goods area before agreement has been reached on services. Such a linkage need not be formally established-it is sufficient that all participating parties are aware of its existence. At the end of 1985 the stage was set for the eighth round of multilateral trade negotiations under the aegis of GATT. It may well become a round which extends GATT's influence into a number of new subject areas. It would be launched because all countries can expect a number of benefits from it. But ultimately it was the determination of the US and the benefits which this country expected from the new round which were largely responsible for setting the preparatory process in motion and determining the direction which it took.

  Sign up to read

  Learn more about book