Much of the history of those 47 years was written in Geneva. But it also traces a journey that spanned the continents, from that hesitant start in 1948 in Havana (Cuba), via Annecy (France), Torquay (UK), Tokyo (Japan), Punta del Este (Uruguay), Montreal (Canada), Brussels (Belgium) and finally to Marrakesh (Morocco) in 1994. During that period, the trading system came under GATT, salvaged from the aborted attempt to create the ITO. GATT helped establish a strong and prosperous multilateral trading system that became more and more liberal through
rounds of trade negotiations
. But by the 1980s the system needed a thorough overhaul. This led to the
Uruguay Round
, and ultimately to the WTO.
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GATT: ?provisional?
for almost half a century
From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established, but throughout those 47 years, it was a provisional agreement and organization.
The original intention was to create
a third institution to handle the trade side of international economic
cooperation, joining the two ?Bretton Woods? institutions, the World Bank and
the International Monetary Fund. Over 50 countries participated in negotiations
to create an International Trade Organization (ITO) as a specialized agency of
the United Nations. The draft ITO Charter was ambitious. It extended beyond
world trade disciplines, to include rules on employment, commodity agreements,
restrictive business practices, international investment, and services. The aim
was to create the ITO at a UN Conference on Trade and Employment in Havana, Cuba
in 1947.
Meanwhile, 15 countries had begun talks in December
1945 to reduce and bind customs tariffs. With the Second World War only recently
ended, they wanted to give an early boost to trade liberalization, and to begin
to correct the legacy of protectionist measures which remained in place from the
early 1930s.
This first round of negotiations resulted in a package
of trade rules and 45,000 tariff concessions affecting $10 billion of trade,
about one fifth of the world?s total. The group had expanded to 23 by the time
the deal was signed on 30 October 1947. The tariff concessions came into effect
by 30 June 1948 through a ?Protocol of Provisional Application?. And so the new
General Agreement on Tariffs and Trade was born, with 23 founding members
(officially ?contracting parties?).
The 23 were also part of the larger group negotiating
the ITO Charter. One of the provisions of GATT says that they should accept some
of the trade rules of the draft. This, they believed, should be done swiftly and
?provisionally? in order to protect the value of the tariff concessions they had
negotiated. They spelt out how they envisaged the relationship between GATT and
the ITO Charter, but they also allowed for the possibility that the ITO might
not be created. They were right.
The Havana conference began on 21 November 1947, less
than a month after GATT was signed. The ITO Charter was finally agreed in Havana
in March 1948, but ratification in some national legislatures proved impossible.
The most serious opposition was in the US Congress, even though the US
government had been one of the driving forces. In 1950, the United States
government announced that it would not seek Congressional ratification of the
Havana Charter, and the ITO was effectively dead. So, the GATT became the only
multilateral instrument governing international trade from 1948 until the WTO
was established in 1995.
For almost half a century, the GATT?s basic legal principles remained much as they were in 1948. There were additions in the form of a section on development added in the 1960s and
?
plurilateral
? agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued. Much of this was achieved through a series of multilateral negotiations known as
?trade rounds? ? the biggest leaps forward in international trade liberalization have come through these rounds which were held under
GATT?s auspices.
In the early years, the GATT trade rounds concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought about a GATT Anti-Dumping Agreement and a section on development. The Tokyo Round during the seventies was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system. The eighth, the Uruguay Round of
1986-94, was the last and most extensive of all. It led to the WTO and a new set of agreements.