General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT), which was signed on
October 30, 1947, by 23 nations, was a legal agreement that aimed to
reduce trade barriers by abolishing or decreasing quotas, tariffs, and
subsidies while retaining considerable restrictions. The GATT was created to
help the world economy recover after World War II by rebuilding and
liberalising global commerce. On January 1, 1948, the GATT came into effect.
It has been developed since then, culminating in the founding of the World
Trade Organization (WTO) on January 1, 1995, which integrated and
expanded it. By this time, 125 countries had signed on to its accords, which
covered almost 90% of world commerce. The GATT is overseen by
the Council for Trade in Goods (Goods Council), which is made up of
representatives from all WTO member nations. Market access, agriculture,
subsidies, and anti-dumping measures are among the topics addressed by
the council’s ten committees. This article helps the readers understand GATT
in a better way.

General Agreement on Tariffs and Trade : an understanding

The GATT was established to set out regulations to eliminate or limit the
most costly and inefficient characteristics of the pre-war protectionist period,
notably quantitative trade barriers like trade restrictions and quotas. The
agreement also established a mechanism for resolving international
commercial disputes, as well as a framework for multilateral tariff reduction
discussions. In the post-war years, the GATT was seen as a great success.
Trade without discrimination was one of the GATT’s major accomplishments.
Every GATT signatory was to be treated on an equal footing with the others.

The ‘most-favoured-nation’ concept, as it is known, has been carried over

into the WTO. As a result, once a nation had negotiated a tariff reduction
with a few other countries (generally its most significant trade partners), the
same reduction would be applied to all GATT members. There were escape
provisions in place, allowing nations to negotiate exclusions if tariff reduction
would disproportionately hurt domestic producers. When it came to
determining tariffs, most countries used the most-favoured-nation approach,
which virtually supplanted quotas. Other broad requirements were consistent
customs laws and each signatory nation’s commitment to negotiate tariff
reductions upon another’s request. Contracting nations might change
agreements if their local producers incurred disproportionate losses as a
result of trade concessions, according to an escape clause.
History behind the General Agreement on Tariffs and Trade
The GATT’s main focus was on resolving individual trade concerns affecting
specific commodities or trading states, although large multilateral trade
conferences were conducted on a regular basis to hammer out tariff
reductions and other issues. From 1947 to 1993, seven such “rounds” were
held, beginning with those in Geneva in 1947 (concurrent with the signing of
the general agreement), Annecy, France, in 1949, Torquay, England, in
1951, and Geneva in 1956 and again in 1960–62. The Kennedy
Round (1964–67), the Tokyo Round (1973–79), and the Uruguay
Round (1986–94) were the most important rounds, all held in Geneva. These
agreements were successful in lowering average tariffs on industrial goods
throughout the world from 40% of their market value in 1947 to less than
5% in 1993.

The Uruguay Round was the most comprehensive collection of trade

liberalization accords ever negotiated by the GATT. At the end of the round, a
global trade deal was signed that dropped tariffs on industrial products by an
average of 40%, decreased agricultural subsidies, and contained ground-
breaking new accords on services trade. The agreement also established the
World Trade Organization (WTO) as a new and stronger global organization
tasked with monitoring and regulating international trade. With the
completion of the Uruguay Round on April 15, 1994, GATT ceased to
function. The WTO established its principles and the numerous trade
agreements achieved under its auspices.

The 550-page “Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Discussions,” signed by ministers in Marrakesh on April 15,
1994, comprised of legal provisions outlining the results of the negotiations
since the Round began in Punta del Este, Uruguay, in September 1986. The
Final Act also included texts of ministerial decisions and declarations that
explained important terms of the agreements. With two notable exceptions,
the final act covered all of the bargaining topics mentioned in the Punta del
Este Declaration. The first was the outcome of “market access
discussions,” in which individual nations had made legally enforceable
pledges to decrease or abolish certain tariffs and non-tariff trade obstacles.
National schedules, which were an important element of the Final Act, were
used to record these concessions. The second was the “first pledges” on
service trade liberalisation. These liberalisation pledges were also included in
national schedules.

Uruguay Round Protocol (GATT 1994)

The outcomes of market access talks in which countries agreed to abolish or
lower tariff rates and non-tariff barriers to goods trade are documented in
national schedules of concessions appended to the Uruguay Round
Protocol, which is an important element of the Final Act. On the day that the
Agreement establishing the WTO entered into effect for a Member, the
schedule appended to the Protocol dealing with that member became a
Schedule to the GATT 1994 relating to that member. The Protocol has five
appendices:

1. Appendix I Section A: Agricultural Products: Tariff concessions on a

Most-Favoured Nation basis;
Appendix I Section B: Agricultural Products: Tariff Quotas;

2. Appendix II: Tariff Concessions on a Most-Favoured Nation Basis on

Other Products;
3. Appendix III: Preferential Tariff: Part II of Schedules (if applicable);
4. Appendix IV: Concessions on Non-Tariff Measures: Part III of
Schedules;
5. Appendix V: Agriculture Products: Commitments Limiting
Subsidisation: Part IV of Schedules,

1. Section I: Domestic Support: Total AMS Commitments,

2. Section II: Export Subsidies: Budgetary Outlay and Quantity,
Reduction Commitments
3. Section III: Commitments Limiting the Scope of Export Subsidies.
Except as otherwise indicated in a Member’s Schedule, the tariff reduction
agreed upon by each member for non-agricultural items shall be
implemented in five equal rate reductions. The first such decrease will take
effect on the day the World Trade Organization (WTO) Agreement enters into
force. Each succeeding decrease will take effect on January 1 of the following
year, with the final rate taking effect no later than four years after the WTO
Agreement enters into force. Participants may, however, implement a
reduction in fewer phases or at earlier dates than those specified in the
Protocol.

The staging of reductions for agricultural goods, as stipulated in Article 2 of

the Agreement on Agriculture, was to be carried out as was indicated in the
relevant portions of the schedules. A related decision on Least-Developed
Country measures specified, among other things, that these countries would
not be obliged to make any obligations or concessions that are incompatible
with their unique development, financial, and trade needs. It also permitted
them to complete their schedules of concessions and promises under Market
Access and Services by April 1995 rather than 15 December 1993, in addition
to other more specific provisions for flexible and favourable treatment.
Agreements that were responsible for the formation of the
World Trade Organization
The World Trade Organization (WTO) accord asks for a unified institutional
framework that includes the GATT, as amended by the Uruguay Round, all
agreements negotiated under its auspices, and the Uruguay Round’s entire
outcomes. A ministerial conference meets at least once every two years to
lead the organization. On a regular basis, a General Council monitors the
agreement’s operation and ministerial decisions. This General Council serves
as a Dispute Settlement Body and a Trade Policy Review Mechanism and has
developed subsidiary bodies such as a Goods Council, a Services Council, and
a TRIPs Council to deal with the complete spectrum of trade concerns
covered by the WTO.

Articles and their purpose under the General Agreement on

Tariffs and Trade
All contracting parties applied the General Agreement ‘provisionally.’ The
GATT is applied under the Protocol of Provisional Application by the original
contracting parties, as well as former territories of Belgium, France, the
Netherlands, and the United Kingdom that acceded to the General Agreement
after gaining independence under Article XXVI:5(c). Chile implemented the
General Agreement with a September 1948 Special Protocol. The General
Agreement was applied by the contracting countries that have acceded since
1948 under their separate Protocols of Accession. The contracting parties
altered the title of the head of the GATT secretariat from ‘Executive
Secretary’ to ‘Director-General’ by a decision dated March 23, 1965.
However, because the General Agreement had not been amended to reflect
this change, the term ‘Executive Secretary’ had been kept in the wording
of Articles XVIII:12(e), XXIII:2, XXVI:4, 5, and 6. The General Agreement’s
responsibilities and powers “must be executed by the person holding the
office of Director-General, who shall, for this purpose, also hold the position
of Executive Secretary,” according to the decision of March 23, 1965. GATT
Articles that are included in the Final Act have been provided hereunder:

1. Article II (Schedules of Concessions): Agreement to record

“additional levies or charges” paid in addition to the recorded tariff
in national schedules and bind them at the levels in effect at the
time the Uruguay Round Protocol was signed.
2. Article XVII (State-trading Enterprises): By enforcing stricter
notification and review procedures, they will be able to keep a closer
eye on their operations.
3. Articles XII and XVIII:B (Balance-of-payments
provisions): Agreement that contracting parties should impose
balance-of-payments limitations in the least trade-distorting way
 possible, preferring price-based measures such as import
surcharges and import deposits over quantitative limits. The
agreement was also reached on protocols for GATT Balance-of-
Payments (BOP) Committee discussions and notification of BOP
measures.
4. Article XXIV (Customs Unions and Free-Trade
Areas): Agreement defining and reinforcing the criteria and
processes for evaluating the implications of new or expanded
customs unions or free-trade zones on third parties. In the event
that contracting parties join a customs union and wish to increase a
binding tariff, the agreement defines the method to be followed to
achieve any necessary compensating adjustment. Contracting
parties’ duties in relation to actions implemented by regional or local
governments or authorities within their jurisdictions are also
defined.
5. Article XXV (Waivers): Agreement on new processes for awarding
exemptions from GATT disciplines, including the specification of
termination dates for any future waivers and the fixation of expiry
dates for current waivers. However, the major clauses addressing
the granting of exemptions are included in the WTO Agreement.
6. Article XXVIII (Modification of GATT Schedules): Agreement
on new processes for discussing compensation when tariff bindings
are amended or removed, including the establishment of a new
negotiating right for the nation whose exports are dominated by the
goods in issue. Smaller and developing nations will be better able to
engage in discussions as a result of this.
7. Article XXXV (Non-application of the General
Agreement): After entering tariff discussions with each other, an
agreement to allow a contracting party or a newly acceding nation
to exercise GATT’s non-application provisions against the other
party. Any use of the WTO Agreement’s non-application provisions
must apply to all multilateral agreements, according to the
agreement.

Agreements under GATT

1. Agreement on Agriculture: The Agriculture Agreement (AoA) is a
World Trade Organization (WTO) international treaty. It was
negotiated at the Uruguay Round of the General Agreement on
Tariffs and Trade, and it went into effect on January 1, 1995, when
the WTO was established.
2. Agreement on Sanitary and Phytosanitary Measures: The
Sanitary and Phytosanitary Measures Agreement lays down the
groundwork for food safety as well as animal and plant health
requirements. It empowers countries to create their own standards,
 which should only be used to preserve human, animal, plant life or
health.
3. Agreement on Textiles and Clothing: The Uruguay Round of
Trade Negotiations produced the Agreement on Textiles and
Clothing (ATC). From the date of the WTO Agreement’s entrance
into effect, all existing textile and garment trade barriers were to be
disclosed and abolished over a 10-year period.
4. Agreement on Technical Barriers to Trade Agreement on
Trade Related Aspects of Investment Measures: Certain
investment measures can limit and distort trade, according to
the Trade-Related Investment Measures Agreement (TRIMS). It
stipulates that members of the WTO may not take any action that
discriminates against foreign products or results in quantitative
limits, both of which are in violation of fundamental WTO principles.
5. Agreement on Implementation of Article VI (Anti-
dumping): In written applications for anti-dumping relief, the Anti-
Dumping Agreement establishes requirements for evidence of
dumping, injury, and causality, as well as other information about
the product, industry, importers, exporters, and other matters, and
specifies that, in special circumstances when authorities initiate
without a written application from domestic industry, they shall
proceed only if they have sufficient evidence of dumping, injury, and
causality.
6. Agreement on Implementation of Article VII (Customs
Valuation): The WTO Agreement on customs valuation aspires for
a fair, uniform, and impartial system for valuing products for
customs purposes, one that is based on business reality and
prohibits the use of false or arbitrary customs values.
7. Agreement on Preshipment Inspection: Private firms are hired
to examine shipping data such as pricing, quantity, and quality of
items bought from another country. The Preshipment
Agreement acknowledges that the GATT Agreement’s principles
apply to the aforementioned action.
8. Agreement on Rules of Origin Agreement on Import
Licensing Procedures: Import licencing should be straightforward,
clear, and predictable, according to the Agreement on Import
Licensing Procedures, so that it does not constitute a trade barrier.
It also explains how nations should inform the WTO when they
implement new or amend current import licencing processes.
9. Agreement on Subsidies and Countervailing Measures: The
World Trade Organization’s (WTO) Agreement on Subsidies and
Countervailing Measures (Subsidies Agreement) establishes
standards for the use of government subsidies as well as the
implementation of remedies to address subsidised trade that has
negative commercial consequences.
 10. Agreement on Safeguards: The Safeguards
Agreement establishes the regulations for using safeguard measures
under Article XIX of the GATT 1994. Safeguard measures are
described as ‘emergency’ procedures taken in response to
increasing imports of certain items that have caused or threatened
to cause substantial harm to the domestic industry of the importing
Member.
11. General Agreement on Trade in Services (GATS): The
Uruguay Round’s outcomes went into force in January 1995, and
one of the most significant successes was the founding of the GATS.
The GATS was founded on the same principles as its merchandise
trade counterpart, the General Agreement on Tariffs and Trade
(GATT) with the purpose of establishing a credible and reliable
system of international trade rules, ensuring fair and equitable
treatment of all participants (principle of non-discrimination),
stimulating economic activity through guaranteed policy bindings
and promoting trade and development through progressive
liberalisation.
12. Agreement on Trade Related Aspects of Intellectual
Property Rights, Including Trade in Counterfeit
Goods: The TRIPS Agreement mandated that WTO members must
offer a minimum degree of protection to the intellectual property of
other WTO members. Copyrights, trademarks, patents, geographical
indications (GI), industrial and layout designs, and concealed
information (trade secrets) are among the topics covered in the
TRIPS Agreement.

Agreement on agriculture
1. The discussions’ (Uruguay Round Protocol) outcomes established a
foundation for long-term agricultural trade and domestic policy
change in the years to come. It takes a significant step toward
achieving the goal of enhanced market orientation in agricultural
commerce. The regulations that govern agricultural commerce have
been reinforced, resulting in more predictability and stability for
both importing and exporting nations.
2. Many additional concerns of essential economic and political
relevance to many members are addressed in the agriculture
agreement. Provisions that encourage the use of less trade-
distorting domestic support policies to maintain the rural economy,
that allow actions to be taken to ease any adjustment burden, and
that introduce strictly prescribed provisions that allow some
flexibility in the implementation of commitments, are found in the
agreement. Specific issues of developing nations, such as those of
net food importers and least-developed countries, have been
addressed. Commitments in the areas of market access, domestic
 assistance, and export competition are included in the agriculture
agreement as well.
3. Non-tariff border controls are replaced with tariffs that provide a
similar degree of protection in the area of market access. Duties
originating from this ‘tariffication’ process, as well as other tariffs on
agricultural goods, are to be cut by an average of 36% in developed
nations and 24% in developing countries, with minimum reductions
necessary for each tariff line. In the case of rich nations, reductions
will be made over a six-year period, while in the case of developing
countries, reductions will be made over a ten-year period. Tariff
reductions are not necessary for least-developed countries.
4. Where present access is less than 3% of domestic consumption, the
tariffication package also allows for the preservation of current
access possibilities and the implementation of minimum access tariff
quotas (at lower tariff rates). Over the course of the implementation
term, these minimum access tariff quotas will be increased to 5%.
In the event of ‘tariffied’ items, ‘special safeguard’ measures will
allow for the imposition of extra tariffs if exports at prices
denominated in domestic currencies fall below a specified reference
level or if imports rise. The import surge trigger in the safeguard is
determined by the present market’s ‘import penetration,’ i.e., when
imports currently account for a substantial share of consumption,
the import surge necessary to activate the special safeguard action
is lower.
5. Domestic policies that have a negligible influence on trade (known
as ‘green box’ policies) are exempted from reduction obligations.
General government services, such as research, disease control,
infrastructure, and food security, are examples of such policies.
Direct payments to producers, such as ‘decoupled’ (from production)
income support, structural adjustment aid, direct payments under
environmental programmes, and direct payments under regional
assistance programmes, are also included.
6. Other policies are not required to be included in the Total Aggregate
Measurement of Support (Total AMS) reduction pledges, in addition
to the green box policies. These policies include direct payments
under production-limiting programmes, certain government
assistance measures to encourage agricultural and rural
development in developing countries, and other support that
accounts for a small percentage of the value of individual product
production or, in the case of non-product-specific support, the value
of total agricultural production in developing countries.
7. The agreement includes ‘peace’ provisions such as an understanding
that certain actions available under the Subsidies Agreement will not
be applied to green box policies, domestic support, and export
subsidies maintained in accordance with commitments. These peace
measures will be in effect for nine years.
 8. The agreement establishes a committee to oversee pledges and the
execution of the decision on measures concerning the potential
negative effects of the reform program on least-developed and net
food-importing developing countries.

Agreement on Sanitary and Phytosanitary Measures

1. The application of sanitary and phytosanitary measures, in other
words, food safety and animal and plant health standards, is the
subject of this agreement. The agreement acknowledges that
governments have the right to take sanitary and phytosanitary
measures, but that they should only be used to protect human,
animal, or plant life or health, and that they should not be used
arbitrarily or unjustifiably to discriminate between members where
identical or similar conditions exist.
2. Members are urged to base their sanitary and phytosanitary
measures on international standards, guidelines, and
recommendations where they exist, in order to harmonize sanitary
and phytosanitary measures as much as practicable. Members may,
however, keep or implement measures that result in higher criteria
provided there is a scientific basis or if consistent risk judgments are
made based on an adequate risk assessment. The Agreement lays
forth the processes and criteria for risk assessment and determining
suitable levels of sanitary and phytosanitary protection.
3. Members are required to recognize other countries’ sanitary and
phytosanitary measures as equivalent, if the exporting nation can
show the importing country that its measures provide an acceptable
degree of health protection.

Agreement on Textiles and Clothing

1. The goal of this negotiation was to ensure the future inclusion of the
textiles and apparel industry into the GATT, based on reinforced
GATT rules and regulations, where much of the trade is now subject
to bilateral quotas established under the Multifibre
Arrangement (MFA).
2. Products that accounted for at least 17% of 1990 imports would be
integrated at the start of Phase 2 on January 1, 1998. Products that
accounted for at least 18% of 1990 imports would be integrated on
January 1, 2002. At the completion of the transition phase, on
January 1, 2005, all remaining goods would be merged. At each of
the first three stages, products should be chosen from each of the
following categories,
 1. Tops and yarns,
2. Fabrics,
3. Made-up textile products, and
4. Clothing.

3. While the agreement is primarily focused on the phase-out of MFA

limitations, it also acknowledges that certain members maintain
non-MFA restrictions that are not justified by a GATT clause. These
would likewise be brought into compliance with GATT within one
year of the Agreement’s entry into force, or phased out gradually
over a period not exceeding the Agreement’s term (that is, by
2005).
4. It also includes a transitional safeguard mechanism that might be
used at any time to apply to items that have not yet been included
in the GATT. Individual exporting countries could face action under
the safeguard mechanism if the importing country could show that
overall imports of a product were entering the country in such large
quantities as to cause serious damage, or threaten it, to the
relevant domestic industry, and that imports from the individual
country concerned had increased sharply and significantly. The
agreement has procedures to deal with probable commitment
circumvention via transshipment, rerouting, fraudulent declarations
about nation or place of origin, and fabrication of official documents.
5. As part of the integration process, all members must take such
actions in the area of textiles and clothing as may be necessary to
comply with GATT rules and disciplines in order to improve market
access, ensure the application of policies relating to fair and
equitable trading conditions, and avoid discrimination against
imports when taking general trade policy measures.
6. A Textiles Monitoring Body (TMB) is in charge of overseeing
commitment implementation and preparing reports for the key
reviews indicated above. Certain kinds of nations, such as those that
have not been MFA members since 1986 (new entrants, small
suppliers, and least-developed countries), will receive preferential
treatment under the agreement.

Agreement on Technical Barriers to Trade

1. This agreement will expand and clarify the Tokyo Round Agreement
on Technical Barriers to Trade. Its goal is to guarantee technical
agreements and standards, as well as testing and certification
procedures to avoid obstruction in commerce. It does, however,
acknowledge that nations have the right to provide protection at
levels they deem appropriate, such as for human, animal, or plant
 life, health, or the environment and that they should not be
prohibited from taking the steps necessary to guarantee that such
levels are fulfilled. As a result, the agreement encourages nations to
utilise international standards where appropriate, but it does not
oblige them to adjust their protection levels as a result of such
standardisation.
2. The revised agreement is unique as it includes processing and
production processes that are relevant to the product’s attributes.
The scope of conformity assessment procedures has been
expanded, and disciplines have been refined. The notification rules
for local governments and non-governmental organizations are
more detailed than those in the Tokyo Round agreement. As an
annexe to the agreement, a Code of Good Practice for the
Preparation, Adoption, and Application of Standards by
Standardizing Organisations is included, which is available for
approval by both commercial and public sector bodies.

Agreement on Trade-Related Aspects of Investment Measures

1. Certain investment policies impede and distort trade, according to
the agreement. It states that no contracting party may use a TRIM
that is incompatible with the GATT’s Articles III (national
treatment) and XI (quantitative limits ban). To that aim, the
agreement includes an example list of TRIMs that have been
determined to be incompatible with these articles. The list contains
measures that demand a certain level of local procurement by an
entity (“local content requirements”) or limit the volume or value of
imports a company can buy or use to a level that is proportional to
the number of products it exports (“trade balancing requirements”).
2. All non-conforming TRIMs must be reported and eliminated within
two years for affluent nations, five years for developing countries,
and seven years for least-developed countries, according to the
agreement. It creates a TRIMs Committee, which will oversee,
among other things, the execution of these pledges. The agreement
also allows for future discussion of whether it should be
supplemented with more comprehensive measures on investment
and competition policy, or not.

Agreement on Implementation of Article VI (Anti-dumping)

1. Article VI of the GATT gives contracting parties the right to impose
anti-dumping measures, which are tariffs against imports of a
product at a price below its ‘normal value’ (usually the price of the
product in the exporting country’s domestic market) if the dumped
imports harm a domestic industry in the importing contracting
 party’s territory. An Anti-dumping agreement signed at the end of
the Tokyo Round has more precise guidelines guiding the use of
such measures. The Uruguay Round negotiations resulted in a
revision of this agreement that addresses many of the areas where
the existing agreement was lacking in accuracy and depth.
2. The agreement enhances the criteria for the importing countries to
demonstrate a clear causal link between dumped imports and local
sector harm. The impact of dumped imports on the business must
be examined in conjunction with other relevant economic factors
affecting the status of the industry. The agreement confirms how
the phrase “domestic industry” is currently defined. The domestic
industry refers to domestic producers of similar items as a whole or
to those whose overall output of those products accounts for a
significant share of total domestic production of those products.
3. All preliminary or final anti-dumping measures must be notified to
a Committee on Anti-dumping Practices promptly and in detail,
according to the agreement. Parties to the agreement will be able to
consult on any topic relevant to the agreement’s operation or the
achievement of its goals, as well as propose the formation of panels
to investigate disagreements.

Agreement on Implementation of Article VII (Customs

Valuation)
The Customs Valuation Decision would allow customs administrations the
power to ask importers for more information if they have grounds to dispute
the claimed worth of imported goods. If the administration retains a
reasonable doubt, notwithstanding any further information, it may be found
that the customs value of the imported products cannot be established on
the basis of the reported value, and customs must calculate the value in
accordance with the Agreement’s terms. In addition, two supplementary
texts explain specific sections of the Agreement that affect developing
nations, such as minimum values and imports by sole agents, sole
distributors, and sole concessionaires.

Agreement on Preshipment Inspection

1. Preshipment inspection (PSI) is the practice of using specialist
private organizations to evaluate shipment details, primarily the
pricing, quantity, and quality of products bought from another
country. The goal of this tool, which is used by developing country
governments, is to protect national financial interests for example,
(by preventing capital flight, commercial fraud, and customs duty
 evasion) and to compensate for administrative infrastructure
deficiencies.
2. The agreement acknowledges that GATT principles and duties apply
to the actions of government-mandated pre-shipment inspection
organizations. Nondiscrimination, transparency, preservation of
sensitive business information, avoidance of undue delay, adoption
of particular rules for performing price verification, and avoidance of
conflicts of interest by PSI agencies are among the requirements
imposed on PSI-user governments.
3. Non-discrimination in the implementation of domestic rules and
regulations, quick publishing of such laws and regulations, and the
provision of technical help to PSI users are among the duties of
exporting contractual parties towards PSI users. The agreement
provides an impartial review system to settle disputes between an
exporter and a PSI agency, which will be handled jointly by an
organization representing PSI agencies and an organization
representing exporters.

Agreement on Rules of Origin

1. The agreement intends to achieve long-term harmonisation of rules
of origin that aren’t related to the awarding of tariff advantages, as
well as ensure that such regulations don’t generate additional trade
barriers. The agreement establishes a harmonisation programme
that will begin as soon as practicable once the Uruguay Round is
concluded and will be completed within three years. It would be
founded on a set of principles, including the objective, intelligible,
and predictable nature of origin rules. A WTO Committee on Rules of
Origin (CRO) and a technical committee (TCRO) under the aegis of
the Customs Cooperation Council in Brussels would carry out the
job.
2. Much work has been done in the CRO and TCRO, and significant
progress has been made in the three years set out in the Agreement
to complete the task. However, due to the complexities of the
challenges, the HWP was unable to be completed by the scheduled
date. In the year 2000, the CRO resumed its operations.
The General Council Special Session voted in December 2000 to
designate the Fourth Session of the Ministerial Conference, as the
new timetable for completing the remaining work.
3. Contracting parties would be expected to ensure that their rules of
origin are transparent, that they do not restrict, distort, or disrupt
international trade, that they are administered in a consistent,
uniform, impartial, and reasonable manner, and that they are based
on a positive standard until the harmonisation programme is
completed. In other words, they should state what confers origin
 rather than what does not. An annexe to the agreement contains a
‘common statement’ on the application of origin regulations to
commodities eligible for preferential treatment.

Agreement on Import Licensing Procedures

1. The updated agreement tightens the rules for users of import
licencing systems, which are in any case far less common currently
than in the past, and improves openness and predictability. The
agreement, for example, requires parties to provide enough
information to allow traders to understand the basis on which
licences are given. It includes new guidelines for notifying the
institution of import licensing proceedings, as well as revisions to
such procedures. It also provides advice on how to evaluate
submissions.
2. The revised agreement establishes criteria under which automated
licensing procedures are deemed not to have trade-restrictive
implications. Importers and exporters should only have to deal with
the administrative burden of non-automated licensing processes if it
is absolutely essential to administer the measures to which they
apply. The updated agreement also stipulates that applications will
be examined for a maximum of 60 days.

Agreement on Subsidies and Countervailing Measures

1. The Subsidies and Countervailing Measures Agreement is designed
to expand on the Tokyo Round’s Agreement on the Interpretation
and Application of Articles VI, XVI, and XXIII. Unlike its predecessor,
the agreement includes a definition of subsidy and adds the idea of
a ‘particular’ subsidy, which is a subsidy that is offered exclusively
to a single firm, industry, or group of companies or industries within
the jurisdiction of the awarding body. Only specified subsidies would
be subject to the agreement’s restrictions.
2. Subsidies are divided into three categories under the agreement.
First, it considers the following subsidies to be “prohibited”; those
contingent, in law or in fact, on export performance, whether solely
or in conjunction with one or more other conditions; and that
contingent, solely or in conjunction with one or more other
conditions, on the use of domestic over imported goods. New
dispute resolution processes apply to prohibited subsidies. The
primary elements include an accelerated time frame for action by
the Dispute Settlement Body, and if the subsidy is judged to be
unlawful, it must be revoked promptly. The complaining member is
entitled to take countermeasures if this is not done within the stated
time frame.
Subsidies that are “actionable” fall under the second group. The agreement
states that no member should use subsidies to harm the interests of other
signatories, such as injury to another signatory’s domestic industry,
nullification or impairment of benefits accruing directly or indirectly to other
signatories under the General Agreement (particularly the benefits of bound
tariff concessions), and serious prejudice to another member’s interests.

Non-actionable subsidies fall into the third category, which can be either non-
specific or specific, such as assistance for industrial research and pre-
competitive development, assistance to disadvantaged regions, or certain
types of assistance for adapting existing facilities to new environmental
requirements imposed by law and/or regulations.

3. The Agreement stipulates that if repayment of funding in the civil

aviation industry is contingent on the number of product sales, and
sales fall short of expectations, this does not automatically result in
a presumption of substantial disadvantage.

Agreement on Safeguards
1. A GATT member can take a “safeguard” action under Article XIX of
the General Agreement to protect a specific domestic industry
against an unanticipated surge in imports of any product that is
causing, or is likely to cause, substantial harm to the industry. The
agreement establishes a bar on so-called “grey area” measures and
a “sunset clause” on all safeguard acts, both of which are
significant. On the export or import side, the agreement states that
a member may not seek, take, or maintain any voluntary export
limitations, orderly marketing agreements, or other similar
measures.
2. All current safeguard measures implemented under Article XIX of
the General Agreement 1947 must be discontinued no later than
eight years after they were originally implemented or five years
after the WTO agreement enters into force, whichever occurs first.
Safeguard measures would not apply to a product from a developing
country member if the developing country member’s share of
the product’s imports does not exceed 3%. Developing country
members with less than 3% import shares collectively account for
no more than 9% of total imports of the product in question.
3. The agreement would create a Safeguards Committee to supervise
the implementation of its provisions and, in particular, to ensure
that its pledges are met.
General Agreement on Trade in Services
1. Three pillars support the Services Agreement, which is included in
the Final Act. The first is a Framework Agreement, which contains
essential responsibilities that all member nations must adhere to.
The second concerns national commitment schedules, which contain
particular additional national obligations that will be subject to a
continual liberalisation process. The third section has a variety of
annexes that address the unique circumstances of various service
sectors.
2. The agreement includes duties about recognition requirements
(such as educational background) for the purpose of obtaining
authorizations, licences, or certification in the services field. It
promotes conditions for recognition that are met by harmonisation
and internationally agreed-upon criteria. Parties are also expected
to guarantee that monopolies and exclusive service providers do not
abuse their positions, according to the regulations.
3. Decisions were made in the last days of the services negotiations on
financial services, professional services, and natural person
movement. The Financial Services Decision stated that obligations in
this sector will be implemented on an MFN basis, and it allows
Members to adjust and complete their commitment schedules and
MFN exclusions six months after the Agreement enters into effect.

Agreement on Trade Related Aspects of Intellectual Property

Rights including Trade in Counterfeit Goods
1. The agreement acknowledges that the lack of a multilateral
framework of principles, rules, and disciplines dealing with
international trade in counterfeit goods, as well as widely differing
standards in the protection and enforcement of intellectual property
rights, has become a growing source of tension in international
economic relations. To deal with the tensions, rules and disciplines
were required. The agreement addresses the applicability of basic
GATT principles as well as those of relevant international intellectual
property agreements, the provision of adequate intellectual property
rights, effective enforcement measures for those rights, multilateral
dispute settlement, and transitional arrangements.
2. In terms of trademarks and service marks, the agreement
establishes what sorts of signs must be qualified for trademark or
service mark protection, as well as the minimum rights that must be
granted to their owners.
In terms of geographical indications, the agreement stipulates that all parties
shall provide methods to prohibit the use of any indicator that misleads
consumers about the origin of goods, as well as any usage that would be
considered unfair competition.

For a period of ten years, industrial designs are also protected under the
agreement. Owners of protected designs would be allowed to restrict goods
bearing or embodying a design that is a duplicate of the protected design
from being manufactured, sold, or imported.

There is a universal responsibility to follow the substantive provisions of

the Paris Convention (1967) when it comes to patents. Furthermore, the
agreement mandates that all inventions, whether goods or processes, in
practically all disciplines of technology be granted 20-year patent protection.
The agreement requires parties to guarantee protection for layout designs of
integrated circuits based on the Washington Treaty on Intellectual Property in
Respect of Integrated Circuits, which was opened for signing in May 1989.

Commercially valuable trade secrets must be safeguarded from breaches of

confidence and other unethical business activities.

3. The agreement’s final clause deals with anti-competitive conduct in

contractual licences. It allows for government-to-government
dialogues when there are grounds to think that licencing procedures
or conditions relating to intellectual property rights are an
infringement of such rights and have a negative impact on
competition.

Understanding Rules and Procedures Governing the

Settlement of Disputes
1. The GATT’s dispute settlement mechanism is widely regarded as one
of the multilateral trade order’s pillars. Reforms agreed upon during
the Mid-Term Review Ministerial Meeting in Montreal in December
1988 have already improved and simplified the system. Disputes
now before the Council are subject to these new rules, which include
increased automaticity in decisions on panel creation, terms of
reference, and composition, so that these decisions are no longer
reliant on the parties’ permission.
2. The Uruguay Round Agreement on Rules and Procedures Governing
Dispute Settlement (DSU) greatly enhanced the present system,
expanding the more automaticity agreed in the Mid-Term Review to
the implementation of panels’ and a new Appellate Body’s
conclusions. Furthermore, the DSU provides an integrated system
that will allow WTO Members to base their claims on any of the
multilateral trade agreements included in the WTO’s Annexes. The
General Council, as well as the councils and committees of the
 covered agreements, shall exercise their jurisdiction in this regard
through a Dispute Settlement Body (DSB).
3. The DSU stresses the significance of discussions in obtaining conflict
settlement by requiring a member to engage in consultations within
30 days of another member’s request for consultations. If no
resolution is reached within 60 days following the request for
discussions, the aggrieved party may request the formation of a
panel. If a disagreement cannot be resolved through discussions,
the DSU mandates the installation of a panel at the DSB meeting
following the one at which a request is made, unless the DSB
unanimously decides against it.
4. The DSU also establishes particular procedures and timelines for
determining terms of reference and panel membership. Unless the
parties agree to specific conditions within 20 days of the panel’s
formation, the standard terms of reference shall apply. If the parties
cannot agree on the panel’s membership within 20 days, the
Director-General has the authority to make the decision. Panels are
usually made up of three people with relevant backgrounds and
expertise from nations that are not parties to the dispute. One of
the DSU’s core clauses underlines that members must use the DSU’s
dispute resolution norms and processes to determine whether or not
there have been breaches or concessions suspended.

Difference between GATT and WTO

The most significant list of differences between GATT and WTO have been
discussed hereunder:

1. The GATT is an international multilateral treaty signed by 23

countries to promote international commerce and eliminate trade
obstacles between countries. WTO, on the other hand, is a
worldwide organisation that replaced GATT and regulates
international commerce between member countries.
2. GATT is a basic agreement with no institutional structure, but it
does have a small secretariat. WTO, on the other hand, is a
permanent organisation with a secretariat.
3. In the GATT, the participating countries are referred to as
contracting parties, whereas in the WTO, they are referred to as
member nations.
4. GATT agreements are temporary in nature, with the government
having the option of treating them as permanent commitments after
47 years. WTO obligations, on the other hand, have been in place
since the outset.
5. The WTO’s scope is broader than the GATT’s in the sense that the
GATT’s regulations apply only when products are traded, unlike the
 WTO, which has laws that apply to both commodities and services,
as well as parts of intellectual property.
6. The GATT agreement is essentially multilateral, although it is
subsequently expanded to include plurilateral agreements. WTO
accords, on the other hand, are completely multilateral.

Thus, After World War II, the fundamental goal of implementing GATT was to
enhance global cross-country commerce in order to strengthen economic
stability. It is the bedrock of the World Trade Organization (WTO), which
established unrestricted trade between States while maintaining some
barriers for the benefit of everyone.