The importance of Gatt

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12 Jul 1993

THE so-called Uruguay Round of international trade negotiations has gone on for so long (seven
years, so far) that it might seem to be unimportant. Nothing could be further from the truth. The
central understanding, the General Agreement on Trade and Tariffs, has been the fundamental
instrument in maintaining and widening free trade between the world's economies. It has been
under threat by the emergence of trade blocks and their willingness to try to protect themselves
by restricting access to their own markets while demanding open access to others'. The Uruguay
talks have gone on for so long precisely because the issues are so vital. The Japanese fear that
free trade in agrarian produce could destroy their rice farmers; the French have similar suspicions
over a wide spectrum of ''green'' products. Neither can easily compete with American farmers
(who enjoy some important protections themselves). Other countries have similar worries -- but
few are innocent of protectionist stances themselves.

Optimists will find in the conclusion of the latest G7 talks in Tokyo a new awareness of the
downside of letting continuing disagreement slip steadily into formal protectionism. The
developed countries openly admit that the restraints of trade are, at least in part, responsible for
the persistent unemployment that affects all of their own economies, if to differing degrees. They
profess to know that the impact of protection is hardest on those economies which are already
weakest, many of which are in the Third World to whose development the richer states are,
verbally, committed. There certainly seems to be little doubt that freer trade will create
employment on a very considerable scale, though it is naive to assume there can be no losers -- if
there really were no losers there would be no problems. Losses can, however, be contained. The
existing Gatt is a flexible instrument with in-built safeguards to ensure that change is never too
drastic as to cripple.

If the spirit of Tokyo does survive, then assumptions that the Uruguay Round will be completed
by the end of this year could be soundly based. The sort of bilateral agreement just concluded
between the Americans and the Japanese may not, however, be the best model. It seems to be
good in itself in that it prevents an American-Japanese trade war (never unthinkable given the
intensity of American resentment at Japanese manufacturing successes in US markets). Both
sides say firmly that it will not discriminate against third parties, but the EC spokesman who
noticed that their agreement requires close monitoring was not just being grudging. Bilateral
understandings, though useful, are no substitute for a general agreement, and may even hinder
one. Gatt is still the best device in this field.
A GATT Overview

The recently enacted agreement on the Uruguay Round of negotiations to revise the General Agreement
on Tariffs and Trade (GATT) provides a new framework within which to operate, namely, the World
Trade Organization (WTO), which has its headquarters in Geneva, Switzerland. The first director general
is Renato Rugiero, a former Italian trade minister.

Organizationally, the most important change from the old GATT organization is the establishment of a
binding dispute settlement procedure. It may be recalled that under the old version of GATT disputes
were referred to a panel and the GATT Council could accept or reject the decision of the panel and on
occasion member countries could delay or prevent the panel's findings from being presented to the
Council. Under the new procedures a Dispute Settlement Body is to be established comprising both
panels to make initial determinations on a case and an Appellate Body. Panels will normally be three
person panels and appeals will normally also be heard by a three-person panel. Panels investigating a
complaint will have the right to seek information or technical advice from anyone they deem
appropriate. Findings and recommendations reached by the Dispute Settlement Body can include
authorizing a country that has been aggrieved by failure of another to comply with its obligations under
the agreement to take reprisals against the erring party. Substantively, the Uruguay Round brought new
topics under the GATT umbrella, including intellectual property.

Contents
[hide]

 1 Goals
 2 History
o 2.1 Background
 3 Achievements
 4 Criticism
 5 See also
 6 References
 7 External links

[edit] Goals
The main objectives of the Uruguay Round were:

 to reduce agricultural subsidies

 to put restrictions on foreign investment, and
 to begin the process of opening trade in services like banking and insurance.
They also wanted to draft a code to deal with copyright violation and other forms of intellectual
property rights.

[edit] History
The round was launched in Punta del Este, Uruguay in September 1986, followed by
negotiations in Montreal, Geneva, Brussels, Washington, D.C., and Tokyo, with the 20
agreements finally being signed in Marrakesh - the Marrakesh Agreement - in April 1994.

[edit] Background

The 1982 Ministerial Declaration identified problems including structural deficiencies, spill-over
impacts of certain countries' policies on world trade GATT could not manage. To address these
issues, the eighth GATT round (known as the Uruguay Round) was launched in September 1986,
in Punta del Este, Uruguay.[1] It was the biggest negotiating mandate on trade ever agreed: the
talks were going to extend the trading system into several new areas, notably trade in services
and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles;
all the original GATT articles were up for review.[2]

The round was supposed to end in December 1990, but the US and EU disagreed on how to
reform agricultural trade and decided to extend the talks.[3] Finally, In November 1992, the US
and EU settled most of their differences in a deal known informally as "the Blair House accord",
and on April 15, 1994, the deal was signed by ministers from most of the 123 participating
governments at a meeting in Marrakesh, Morocco.[4] The agreement established the World Trade
Organization, which came into being upon its entry into force on January 1, 1995, to replace the
GATT system.[2] It is widely regarded as the most profound institutional reform of the world
trading system since the GATT's establishment.[5]

[edit] Achievements
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the
Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of
GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994).[6] The
GATT 1994 is not, however, the only legally binding agreement included in the Final Act; a long
list of about 60 agreements, annexes, decisions and understandings was adopted. In fact, the
agreements fall into a simple structure with six main parts:

 an umbrella agreement (the Agreement Establishing the WTO);

 agreements for each of the three broad areas of trade that the WTO covers: goods and
investment (the Multilateral Agreements on Trade in Goods including the GATT 1994 and the
Trade Related Investment Measures (TRIMS)), General Agreement on Trade in Services (GATS),
and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);
 dispute settlement (DSU);
 Agreement on Customs Valuation and
 reviews of governments' trade policies (TPRM). [7]
[edit] Criticism
Groups such as Oxfam have criticized the Uruguay Round for paying insufficient attention to the
special needs of developing countries. One aspect of this criticism is that figures very close to
rich country industries — such as former Cargill executive Dan Amstutz — had a major role in
the drafting of Uruguay Round language on agriculture and other matters. As with the WTO in
general, Non-governmental organizations (NGOs) such as Health Gap and Global Trade Watch
also criticize what was negotiated in the Round on intellectual property and industrial tariffs as
setting up too many constraints on policy-making and human needs.

[edit] See also

 Golan v. Gonzales, a challenge to the copyright restoration provisions of the Uruguay Round
Agreements Act of 1996, the implementation of the Uruguay Round agreements in the United
States Code
 Tokyo Round
 Doha Round

[edit] References
1. ^ P. Gallagher, The First Ten Years of the WTO, 4
2. ^ a b The Uruguay Round, World Trade Organization
3. ^ A. Bredimas, International Economic Law, 16
4. ^ Even after agreement was reached in December 1993, and the Final Act was signed, the effort
almost foundered in the US Congress, and the member states engaged in a quarrel for close to a
year about who would be the first Director General of the WTO (A.F. Lowenfeld, Preface, ix).
5. ^ P. Gallagher, The First Ten Years of the WTO, 10
* Martin-Winters, The Uruguay Round, 2
*Kay, Adrian and Ackrill, Robert (2009) Institutional Change in the International Governance of
Agriculture: A Revised Account, Governance 22.3: 483-506
6. ^ P. Gallagher, The First Ten Years of the WTO, 4
* The Uruguay Round, World Trade Organization
7. ^ Overview: a Navigational Guide, World Trade Organization. For the complete list of "The
Uruguay Round Agreements", see WTO legal texts, World Trade Organization, and Urugua
Round Agreements, Understandings, Decisions and Declarations, WorldTradeLaw.net

[edit] External links

 WTO history of the Uruguay Round
 WTO Final Act of the Uruguay Round