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Countries all over the world are increasingly engaging in international trade. In
order to prevent international disputes, regulation of this trade to a certain
extent – can help to improve efficiency and effectiveness of international
transactions.
This module deals with tariff barrier reduction on an international level. More
specifically, attention will be paid to the working of the World Trade Organisation
(WTO) as this organisation is the only International Trade Organisation which aims
at the reduction of (tariff) barriers to trade on a world-wide scale.
The WTO was recently set up as a successor to GATT. GATT now forms a part of the
WTO, which also covers GATS, the General Agreement on Trade in Service, and
Intellectual Property Rights (IPRs).
The Netherlands and other European countries’ external trade condition are mostly
determined by EC Regulations. Special agreements between the EU and EFTA countries
(the earlier mentioned EEA) also exist. On an international scale, the member
states of the European Union are bound as a block to the agreements of the WTO.
The WTO is the most important Organisation for regulating global trade, replacing
the General Agreement on Tariffs and Trade (GATT).
The European Commission acts as the single spokesman for the 15 EU member states in
a WTO context. Already widely publicised, agriculture and service included for the
first time as sectors in the context of GATT/WTO – have turned out to be the
stumbling block on the path to concluding the Uruguay Round of GATT/ WTO
negotiations. The EU also plays a not-unimportant role in the framework of the
United Nations.
Twenty-three countries signed the General Agreement on Tariffs and Trade (GATT),
established in 1947. The organisation was meant to be the forerunner of the
International Trade Organisation (ITO), but the latter was later renamed, when
installed, and is called the World Trade Organisation (WTO), of which, GATT now
only forms one part. The WTO is the one and only Global Body which aims at the
liberalisation of global trade on a multilateral basis.
Uruguay Round:
The Uruguay Round discussions began in 1986 (Punta del Este, Uruguay) and were
supposed to be concluded at the end of December 1990. However, because of stumbling
blocks along the road, negotiations lasted until April 1994. The final act
embodying its results came into force on January 1, 1995.
Broadly speaking, three developments made several GATT member countries feel that
there was a need to hold a new round of negotiations.
In the agricultural sector, most of the developed countries had taken an advantage
of the loophole to establish policies that were not always consistent with GATT
principles (the EU’s Common Agricultural Policy is a clear example of this).
Secondly, by the same time, it has become evident that trade in service has grown
into an important component of international trade. The rules of GATT applied only
to trade in goods and there were no international rules on measures taken by
countries to protect their service.
Industrial opinion was growing, therefore, both for the efficient development of
the service industries in different countries and to develop trade in service, it
was time to bring this trade under international discipline.
In many ways, the launching of the negotiations coincided with the decision of a
number of developing countries to reorient their trade and economic policies away
from import substitution to export-oriented growth.
The measures they were taking to reduce tariffs, to liberalise their import control
system and to open their doors to foreign investment were consistent with GATT
principles.
Though these measures were unilateral and not influenced by the launching of
negotiations, they enabled developing countries – including those, which were
originally skeptical – to take a constructive attitude to the issues being
discussed and to agree to integrate them more fully into the legal system which was
being formulated.
This shift in trade policies and the adoption of market – oriented reforms also led
a number of developing countries to seek GATT membership.