During the GATT ( General Agreement on Tariffs and Trade ) years, eight rounds of tariff negotiations were held

between 1947 and 1994: Geneva (1947), Annecy (1949), Torquay (1950-51), Geneva (1956), Geneva (1960-61) - also
known as the Dillon Round, the Kennedy Round (1964-67), the Tokyo Round (1973-79) and the Uruguay Round
(1986-94).
● In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation
and/or definition of Geneva Rounds: The first and fourth GATT Round of multilateral trade negotiations,
held in Geneva, Switzerland. The “First Round” involved the actual drafting of the GATT itself as well as
tariff negotiations among the original contracting parties; the Preparatory Committee met in October and
November of 1946, drafting of the General Agreement took place between 20 January and 28 February,
1947, and tariff negotiations lasted from April to October, 1947.3 The “Fourth Round” took place from
January to May, 1956.
● The Annecy Round was a multi-year multilateral trade negotiation (MTN) between 26 nation-states that were
parties to the GATT. This second round took place in 1949 in Annecy, France. 13 countries took part in the
round. The main focus of the talks was more tariff reductions, around 5,000 in total.
● The Torquay Round was a multi-year multilateral trade negotiation (MTN) between nation-states that were
parties to the GATT. This third round occurred in Torquay, England in 1951.Thirty-eight countries took part in
the round. 8,700 tariff concessions were made totalling the remaining amount of tariffs to ¾ of the tariffs
which were in effect in 1948. The contemporaneous rejection by the U.S. of the Havana Charter signified the
establishment of the GATT as a governing world body.
● The Geneva Round was the fourth session of General Agreement on Tariffs and Trade (GATT) multilateral
trade negotiations in Geneva, Switzerland. It started in 1955 and lasted until May 1956. Twenty-six countries
took part in the round. $2.5 billion in tariffs were eliminated or reduced.
● The Dillon Round, Geneva, 1960-61, By the time they reached their fifth tariff negotiation, GATT signatories
decided to give the talks a name. The negotiations launched in Geneva on 1 September 1960 were to
become known as the Dillon Round, after C Douglas Dillon, US undersecretary of state under President
Eisenhower, and Treasury Secretary under President Kennedy (who took office during the round in January
1961). By then the European Community had been set up and was beginning to match the United States'
economic clout.
● The Kennedy Round, Geneva, 1964-1967, GATT trade rounds were getting longer and more complicated.
In the sixth, the Kennedy Round, participation surged to more than 60 countries - 66 nations attended the
opening ceremony, pictured here, on 4 May 1964 in Geneva. The subjects discussed also expanded, from
the traditional tariff cuts to new trade rules, such as those on the use of anti-dumping measures. The
Kennedy Round was named after the US president who had died the previous year. This was partly in his
memory and partly because President Kennedy had secured the 1962 US Trade Expansion Act which
authorized the US government to negotiate tariff cuts of up to 50%, a key factor allowing the talks to take
place.
● The Tokyo Round, 1973-79 Another decade, and GATT negotiations moved outside Europe for the first
time. The seventh round was launched at a ministerial meeting in Tokyo, 12-14 September 1973, seen
here.After the inauguration, the hard bargaining returned to Geneva.The Tokyo Round took a broader look at
the trade rules than its predecessor, the Kennedy Round, with mixed results. Participation swelled again to
102 countries. The tariff negotiations led to further substantial reductions in customs duties. A series of
agreements were reached on various non-tariff barriers, but they were only signed by some participants -
they became known as the Tokyo Round "codes". However, the talks failed to come to grips with
fundamental reforms in agricultural trade, and stopped short of providing a new agreement on "safeguards"
(emergency import measures). The first steps in that direction were to take place in the next round.
● The Uruguay Round, 1986-94: the last and biggest GATT round In 1986, a GATT round was launched in
a developing country for the first time. By now developing countries had become the majority in the GATT
system, and in this round they were to play an unprecedented active role in the talks, alongside their more
powerful fellow-participants.In September 1986, trade ministers met in the Uruguay resort of Punta del Este
(the meeting is pictured here). After a week of tough talking, they agreed to launch new negotiations. As in
previous rounds, these took place mainly in Geneva.The Uruguay Round turned out to be the longest, most
complicated, and the last of the GATT rounds. It took seven and a half years to complete, and it led to the
most fundamental reform of world trade rules since GATT itself was created in 1948.
● The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to
achieve major reform of the international trading system through the introduction of lower trade barriers and
revised trade rules. The work programme covers about 20 areas of trade. The Round is also known
semi-officially as the Doha Development Agenda as a fundamental objective is to improve the trading
prospects of developing countries. The Round was officially launched at the WTO’s Fourth Ministerial
Conference in Doha, Qatar, in November 2001. The Doha Ministerial Declaration provided the mandate for
the negotiations, including on agriculture, services and an intellectual property topic, which began earlier. In
Doha, ministers also approved a decision on how to address the problems developing countries face in
implementing the current WTO agreements.
 INTERNATIONAL TRADE THEORY

International trade theories are simply different theories to explain international trade. Trade is the concept of

exchanging goods and services between two people or entities. International trade is then the concept of this

exchange between people or entities in two different countries. People or entities trade because they believe that they

benefit from the exchange. They may need or want the goods or services. While at the surface, this many sound very

simple, there is a great deal of theory, policy, and business strategy that constitutes international trade.

Classical or Country-Based Trade Theories

Mercantilism

Developed in the sixteenth century(1630), mercantilism was one of the earliest efforts to develop an economic

theory. This theory stated that a country’s wealth was determined by the amount of its gold and silver holdings. In it’s

simplest sense, mercantilists believed that a country should increase its holdings of gold and silver by promoting

exports and discouraging imports. In other words, if people in other countries buy more from you (exports) than they

sell to you (imports), then they have to pay you the difference in gold and silver. The objective of each country was to

have a trade surplus, or a situation where the value of exports are greater than the value of imports, and to avoid a

trade deficit, or a situation where the value of imports is greater than the value of exports.

Absolute Advantage
In 1776, Adam Smith questioned the leading mercantile theory of the time in The Wealth of Nations.Adam Smith, An

Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776). Recent

versions have been edited by scholars and economists. Smith offered a new trade theory called absolute advantage,

which focused on the ability of a country to produce a good more efficiently than another nation. Smith reasoned that

trade between countries shouldn’t be regulated or restricted by government policy or intervention. Smith’s theory

reasoned that with increased efficiencies, people in both countries would benefit and trade should be encouraged. His

theory stated that a nation’s wealth shouldn’t be judged by how much gold and silver it had but rather by the living

standards of its people.

Comparative Advantage
David Ricardo 1817, has given the comparative advantage theory. Comparative advantage occurs when a country
cannot produce a product more efficiently than the other country; however, it can produce that product better and
more efficiently than it does other goods. The difference between these two theories is subtle. Comparative advantage
focuses on the relative productivity differences, whereas absolute advantage looks at the absolute productivity.
Heckscher-Ohlin Theory (Factor Proportions Theory)

Given by Eli Heckscher and Bertil Ohlin. Their theory, also called the factor proportions theory, stated that
countries would produce and export goods that required resources or factors that were in great supply and, therefore,
cheaper production factors. In contrast, countries would import goods that required resources that were in short
supply, but higher demand. Trade patterns are recognized by factor endowment rather than productivity. The cost of
any factor or resource is simply the function of demand and supply.

Modern or Firm-Based Trade Theories

In contrast to classical, country-based trade theories, the category of modern, firm-based

theories emerged after World War II and was developed in large part by business school professors,

not economists. The firm-based theories evolved with the growth of the multinational company

(MNC). The country-based theories couldn’t adequately address the expansion of either MNCs or

intra industry trade, which refers to trade between two countries of goods produced in the same

industry. For example, Japan exports Toyota vehicles to Germany and imports Mercedes-Benz

automobiles from Germany.

Modern or Firm-Based Trade Theories

In contrast to classical, country-based trade theories, the category of modern, firm-based theories emerged after

World War II and was developed in large part by business school professors, not economists. The firm-based theories

evolved with the growth of the multinational company (MNC). The country-based theories couldn’t adequately

address the expansion of either MNCs or intra industry trade, which refers to trade between two countries of

goods produced in the same industry. For example, Japan exports Toyota vehicles to Germany and imports

Mercedes-Benz automobiles from Germany.

Product Life Cycle

Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory in the 1960s. The

theory, originating in the field of marketing, stated that a product life cycle has three distinct stages: (1) new product,

(2) maturing product, and (3) standardized product. The theory assumed that production of the new product will

occur completely in the home country of its innovation. In the 1960s this was a useful theory to explain the

manufacturing success of the United States. US manufacturing was the globally dominant producer in many

industries after World War II. The product life cycle theory has been less able to explain current trade patterns where

innovation and manufacturing occur around the world.

Global Strategic Rivalry Theory

Global strategic rivalry theory emerged in the 1980s and was based on the work of economists Paul Krugman and

Kelvin Lancaster. Their theory focused on MNCs and their efforts to gain a competitive advantage against other global

firms in their industry. Firms will encounter global competition in their industries and in order to prosper, they must

develop competitive advantages. The critical ways that firms can obtain a sustainable competitive advantage are

called the barriers to entry for that industry. The barriers to entry refer to the obstacles a new firm may face when

trying to enter into an industry or new market. The barriers to entry that corporations may seek to optimize include:

-research and development,the ownership of intellectual property rights, economies of scale, unique

business processes or methods as well as extensive experience in the industry, and the control of

resources or favorable access to raw materials.

Porter’s National Competitive Advantage Theory

In the continuing evolution of international trade theories, Michael Porter of Harvard Business School developed a

new model to explain national competitive advantage in 1990. Porter’s theory stated that a nation’s

competitiveness in an industry depends on the capacity of the industry to innovate and upgrade. His theory focused

on explaining why some nations are more competitive in certain industries. To explain his theory, Porter identified

four determinants that he linked together. The four determinants are (1) local market resources and capabilities, (2)

local market demand conditions, (3) local suppliers and complementary industries, and (4) local firm characteristics.

1. Local market resources and capabilities (factor conditions). Porter recognized the value of the
factor proportions theory, which considers a nation’s resources (e.g., natural resources and available labor)
as key factors in determining what products a country will import or export.
2. Local market demand conditions. Porter believed that a sophisticated home market is critical to
ensuring ongoing innovation, thereby creating a sustainable competitive advantage. Companies whose
domestic markets are sophisticated, trendsetting, and demanding forces continuous innovation and the development
of new products and technologies.
3. Local suppliers and complementary industries. To remain competitive, large global firms benefit
from having strong, efficient supporting and related industries to provide the inputs required by the
industry. Certain industries cluster geographically, which provides efficiencies and productivity
4. Local suppliers and complementary industries. To remain competitive, large global firms benefit
from having strong, efficient supporting and related industries to provide the inputs required by the
industry. Certain industries cluster geographically, which provides efficiencies and productivity