For some, strategic trade theory is destructive.

It is seen as an intellectual game with no connection

to the real trade policy. However, it has affected government policy and has contributed to the
slowdown in the increase of world trade. A new trading system, following World War II, emerged.
While the US sought to show their industrial supremacy by calling for free trade and open markets,
the British were worried about the “dollar shortage". The agreement to establish the ITO failed to
forward any solution to many issues. In 1948, the GATT was established to ensure “freer and fairer”
trade. It is a fixed rule trading system. The latter was based on multilateralism. The GATT's
establishment was a significant achievement as it has contributed to decreasing the trade barriers,
fostering trade liberalization, and facilitating trade discussions. Unlike the ITO, the scope of GATT
was limited as it was considered a negotiating forum and not an international organization. Its
capability to solve trade conflicts was restricted. The awareness of the limitations led to the GATT’s
incorporation in 1995 within the World Trade Organization that enjoys expanded responsibilities and
authority.

The postwar period was characterized by several agreements to lessen tariff barriers. The fear of the
probable trade diversion or the outcomes of the European Economic Community led the GATT
members, during the Kennedy Round, to reduce tariffs on certain products and made trade-offs. The
Round resulted in many reforms as the regulation of “dumping” practices and exporting from LDCs.
The other important initiative was the Tokyo Round. It involved tariff cuts on most industrial goods,
liberalization of agricultural trade, and decrease of non-tariff obstacles. The Round aimed to deal
with unfair trade practices. However, it did not fix different issues as the American-European conflict
over agriculture, please the LDCs, or end the proliferation of non-tariff barriers that appeared due to
the Protectionism in the 1970s. In the 1980s, the “new regionalism” and the movement toward
European integration were seen as a menace to the multilateral trading system. This threat resulted
in the launch of the Uruguay Round in 1986 by the Reagan administration. The treaty produced by
the Uruguay Round diminished tariffs on manufactured goods and reduced trade barriers in some
key areas. The initiative’s notable success was the creation of the WTO which is responsible for
facilitating international economic cooperation in trade liberalization. Unfortunately, the Uruguay
Round failed to settle issues. The failure to reduce tariffs on agriculture and textiles remains a
serious problem as LDCs would profit from lower tariffs. Besides, new matters emerged in 1993 as
labor standards, the environment, and human rights. Trade became related to political issues and
came into conflict with the American domestic interests, leading to a new trade agenda. This agenda
deals with labor standards, human rights, the environment, and national sovereignty. These issues
raise the question of whether they should be handled collectively with conventional trade issues or
in a distinct venue. While powerful groups consider that these matters should be incorporated into
the international trade regime, others are against integrating them into international trade
negotiations. The issue of labor standards has become a major obstacle to trade liberalization in the
United States. The combination of education and economic development would pave the way for
the resolution of these problems. One of the most troubling features of the new trade agenda is the
increased attacks by environmentalists, human rights activists, protectionist trade unions on the
WTO, and other institutions. The WTO, the World Bank, and the IMF have become the
representatives of globalization for those who condemn it for global problems. International
institutions have failed in certain areas due to the governments.

Finally, the trade regime is one of the greatest successes that the twentieth century had witnessed.
The different rounds contributed to reducing the tariffs, quotas, and subsidies. However, trade has
extended and becomes controversial.