General Agreement on Tariffs and Trade: Origins and Overview

Origins and Overview

Antecedents to GATT
‡ After World War II, as with other aspects of post war planning- like the creation of the UN, the necessity in the trade field for the creation of a regime of non discrimination- of MFN treatment, prohibition of quantitative restrictions and reduction of trade barriers and open markets was felt. ‡ Churchill and Roosevelt along with other Allied Powers felt that the failure of the US to join the League of Nations and the disaster of the League that failed to prevent the WW II required the creation of multilateral (universal) organizations that could serve both as a forum of negotiations, as a guardian of rules to prevent future conflict and foster mutual and universal agreement.

Institutions Prior to GATT
‡ Agreement on the creation of- IMF and World Bank was reached in July 1944 at the Bretton Woods Conference. ‡ Agreement on creating an international Civil Aviation Organization was reached on Chicago in December 1944. ‡ Agreement on the UN Charter was reached in San Francisco on April 1945.

the US government issued a document titled µProposals for Expansion of World Trade and Employment. resulting from a consensus b/t US and UK discussions. ‡ Most important aspect of the Proposals: Detailed charter/code of conduct relating to governmental restraints on International trade and creation of the International Trade Organization.Birth of GATT.¶ for consideration by an International Conference on trade and Employment.Precursor GATT‡ In November 1945. .

Gist of the Proposed Code ‡ Affirmation of the principle of unconditional most favoured nation treatment and prohibition of quantitative restrictions. prevention of cartels. ‡ Limiting subsidies. (subject to several restrictions. conforming state trading to market conditions. . including agriculture). to provide a forum for settlement of disputes. collection/dissemination of trade statistics and preparation of guidelines for customs valuation. limited resort to commodity agreements and exceptions to countries with balance of payment problems ‡ International Trade Organization (ITO) was to administer the code.

ECOSOC appointed a Preparatory Committee of 19 countries to draft the document to be considered at the conference. .UN ECOSOC Proposal for International Conference on Trade and Employment was taken up by the UN ECOSOC at its 1st meeting in Paris in February 1946. In accordance with a resolution introduced by the US.

which became the basis for a Plenary Conference on trade and Development convened by the UN in Havana in November 1947. ‡ 1st draft of the Charter for International trade Organization was produced at the London meeting ‡ 2nd draft was produced by a technical drafting committee that met from January-February 1947 at UN temporary seat in Lake Success. NY ‡ 3rd draft.Stages of creation of the Draft Charter ‡ Preparatory Committee met in London on OctoberNovember 1946. .Full Preparatory Committee met in Geneva from April ±August 1947 for the draft. to continue work on the draft charter suggested by the US.

with concessions on products µpaid for¶ based on reciprocity.US Initiative ‡ After the µProposals¶ were issued the US issued an invitation to fifteen countries to enter into negotiations for conclusion of multi lateral trade agreement. ‡ Negotiations were on a µone on one¶ sessions focusing on products where one was an important market and other side was a principal supplier. ‡ 8 other countries joined and engaged in a tariff cutting negotiation. simultaneously as the prior drafting sessions for the ITO were going on. .

22 involving the US.000 items of trade were considered that resulted in either a substantial reduction.US Initiative Cont¶d ‡ Total of 123 sets of negotiations took place in Geneva in the period of April-October 1947 among 23 countries. 1948. . ‡ The General Agreement was opened for signature on October 30. low rates of duties or duty free entry subject to binding obligations.on January 1. About 50. and entered into effect-provisionally. 1947.

.Pace and volume of the negotiations were maintained because they were all held at the same time.concessions were recorded on a single documentGeneral Agreement on Tariff and Trade which comprised of binding tariff schedules and a code of conduct designed to Safeguard (provisionally) the undertakings given and a common standard of behaviour. . which was due to expire in June 1948. spurred by the US statute that gave the executive branch negotiating authority. negotiated reductions and binding tariffs were generalized to all participants. Geneva rounds set the precedent for subsequent rounds of GATT. ‡ 2nd.e.Consequences of the Negotiations ‡ 1st.All µconcessions¶ i. ‡ 3rd. in implementation of MFN.

employment. commodity agreements. an elaborate structure for the International trade Organization. 1947.Conference on Trade and Employment (ITO) ‡ Havana Conference on Trade and Employment opened on November 21. 1948. ‡ After acrimonious debate. trade (commercial policy). . restrictive business practices. ‡ Agenda: Importantly. on behalf of 53 states. Final Act of the Havana Conference embodying the ITO was signed on March 24. economic development.

provisionally crafted with some adjustments agreed to at Havana.Reasons for non-implementation of nonITO Charter ‡ US Congress showed little enthusiasm for the Final Act after the initial initiative. . ‡ US was ambivalent. and not requiring parliamentary approval remained in effect till 1995 till WTO came into existence and included the GATT 1947 as the basic text with later additions. like the Marshall Plan for reconstruction of Europe after WW II. ITO faded away. Other countries followed suit. and waited for the US to first ratify the Charter. as they thought that the Charter may impair support for high priority issues of foreign affairs at the time. ‡ GATT 1947. establishment of a program of controls on export of strategic materials and war with Korea.

Responsibility of keeping the informal structure of GATT together to change policies.¶ Overview of GATT: ArchitectureArchitecture. before domestic implementation and changes in national substantive laws by countries. was all up to the µCONTRACTING PARTIES. for 47 years..‡ 1st.. etc.Reasons for its longetivity . because of its depth and flexibility to changing times. led the signatory states to sign a Protocol of Provisional Application. especially the US. conduct meetings and grant waivers.The problem of formal ratification. with the intention that formal ratification would be directed to the forthcoming ITO Charter. But this provisional application has outlasted all others as the primordial international trade agreement.

Protocol required signatories to apply Parts I and III without reservation but Part II (µonly to the extent not inconsistent with existing domestic laws). ‡ Part I contained the most basic provision.¶ which provided national legislation inconsistent with GATT clauses was not unlawful if required by legislation existing as of October 30.MFN treatment (Art.Architecture cont¶d ‡ 2nd. antidumping and countervailing duties (Art VI). III). I). quantitative restrictions (Art XI). for original and date of accession for states joining later. measures to safeguard balance of payments (Art. II). but subject to a µgrandfather clause. waivers (Art XXV(5)) tariff negotiations (Art. binding of scheduled concessions (Art. ‡ Part II contained substantive provisions of code of conduct. XXVIII). ‡ Part III contained µprocedural provisions¶ like customs unions and FTA¶s (Art XXIV).national treatment in aspects like internal taxation regulation (Art. . 1947. XII-XV).

Universal MFN: ‡ Trade to be conducted on basis of non-discrimination. I the obligation to apply duties on imports of goods equally without regard to origin of the goods ‡ 2. every 3 years but balance in concessions maintained.Major Principles: ‡ 1. No Increased trade barriers: ‡ Governmental restraints on goods movement-minimum and if changed should only be reduced. Bound duties may be subject to unbinding after discussions.all contracting parties to apply to others duties set forth in Schedules submitted at the close of tariff negotiations. . ‡ Art. ‡ All contracting parties undertake in Art. II.

XI) ‡ Tariffs not prohibited.tariffs formulated as a % of the value of the goods imported..Principles cont¶d ‡ 3. based on per unit or some other measure.ad valorem tariff.tariff measured by the value of competing products of domestic origin (Art VII). Tariffs Only as the accepted form of trade restraints: ‡ Tariffs are easy to understand than other quantitative restrictions like licenses. and other NTB¶s like quotas that are prohibited subject to exceptions (Art. . specific tariffs i.e. ‡ Tariffs prohibited.

Principles Cont¶d ‡ 4. . National treatment: ‡ Internal Taxes. ‡ States not barred from imposing sales taxes or regulatory requirements. ‡ Together with MFN the national treatment principle emphasizes tariffs as the sole accepted protectionist instrument and non discrimination against goods based on the country of origin. ‡ US insisted upon this principle at Havana over substantial objection. other regulations not to be imposed discriminatorily b/t domestically produced and imported products. but neither in thought or effect shall there exist a distinction b/t burden borne by imported goods compared to domestic goods.

as it was earlier thought that more regulations would be included in the ITO Charter that failed to materialize.¶ was only included into the text of GATT at the Review session held in Geneva in 1954-5.¶. XXVIII). ‡ µSubstantial Reductions of general tariff levels. .Principles Cont¶d ‡ 5. Regular Negotiations: ‡ Regular negotiations b/t Contracting parties to lower trade barriers on basis of reciprocity and multilateral framework (Art.

‡ Although. Article I cautions that the margin of preference cannot be increased from that prevailing at the start of the Geneva Conference. 1947. April 10. undermining MFN principle to some extent. ‡ However. . preferences were allowed to assuage the desire of colonial powers to preserve some form of economic ties with the countries. where such ties were dissolving. Declining role. (the fundamental MFN article). by express authorization to maintain the Imperial and Commonwealth preferences. and comparable arrangements with other overseas territories.Qualifications/ Exceptions ‡ (a) Preservation of Existing Preferences: ‡ Discussions b/t the US and UK preceding the war was included as the qualifying Article I.

Dumping. . state trading. customs valuations. ‡ One of the reasons why even the US a joined GATT along with about a 100 other countries acceding later.Exceptions Cont¶d ‡ (b) µExisting Legislation¶ and Protocol of Provisional Application: ‡ Contracting states were not obligated to change existing legislation with respect to rules in Part II relating to subsidies. national treatment and provisional quantitative restrictions. to their individual parliaments. was b/c countries could join GATT without submitting the Agrt..

‡ Protocol does not include re-enacted laws.¶ to only justify a measure contrary to GATT provision that is required by national legislation and as contrasted with merely being authorized.Exceptions Cont¶d ‡ GATT panels interpreted the µnot inconsistent with existing legislation. .

Became an issue of contention at the Tokyo round when the Subsidies Code was discussed.Exceptions Cont¶d ‡ Eg: US anti subsidy statute adopted in 1897 and remained in effect as part of the Tariff Act of 1930 until 1979.would have violated GATT Art. Statute provided for imposition of countervailing duties on subsidized imports. VI(6) but for the Protocol. .

but could announce its inapplicability of GATT to that state. provided that when a state joins GATT it could announce that it would not enter into tariff negotiations/and not have GATT apply in relation to that state. France and Belgium. Also. ‡ Eg: Abused when about 15 countries having no trade relations with Japan at that time. invoked Art XXXV during Japan¶s accession in 1955. but as part of negotiations for Japan to liberalize imports. Later rescinded. UK.XXXV): ‡ First proposed by India. contracting parties could not veto the accession of a new party. like Australia. the Netherlands.Exceptions Cont¶d ‡ (c) Political Exclusions (Art. Article XXXV added in 1948. .

since interpretation was subjective with no objective criteria listed. ‡ Eg: US/Nicaragua during the Sandinistas control of Nicaragua. its invocation by countries was deemed reasonable based on facts surrounding individual cases. XXI.Exceptions Cont¶d ‡ (d) National Security (XXI): ‡ According to Art. But. .¶ ‡ Potential for misuse. and guerilla activities in neighbouring countries (1984-5) EC/Yugoslavia after the breakup of the erstwhile Yugoslav federation. nothing in the Agreement is to prevent a contracting party from taking any action µwhich it considers necessary for the protection of its essential security interests.

i. ‡ Exceptions to follow the non discrimination principle and GATT panels suggested that the importing state bears the burden to prove that the challenged measure was not protectionist in nature but necessary to accommodate state¶s purpose.. prevention of deceptive trade practices and measures relating to the conservation of exhaustible natural resources. products of prison labour.Exceptions Cont¶d ‡ (e) µGeneral Exceptions:¶ ‡ Art. sanitary and Phytosanitary Measures were enacted. safety. and subjects excluded from GATT like. It includes reasonable restraints on imports on the basis of health. ‡ Remained problematic till the Uruguay Round and agrts. importantly. less restrictive trade measures would not accomplish the purpose.exceptions to general provisions of GATT. relating to Trade. . XX is designed to specifically justify-but to limit.. national artistic measures. trade in gold and silver. trademarks and copyright. public morals.e. measures relating to protection of laws and secure compliance relating to protection of patents.

‡ But.¶ Mere aim to increase domestic market share is not a valid reason..Exceptions Cont¶d ‡ (f) Permissible Quantitative Restrictions: ‡ According to Art.) paragraph (2)(c) permits contracting parties to impose restrictions on imports on any agricultural or fishing product when µnecessary for enforcement¶ of a governmental program restricting production. 3. XI paragraph (I) the principle that all quantitative restrictions are prohibited (see Sec. compared to the actual proportion effected«in absence of restrictions. (4) supra.permitted quota µshall not be such as will reduce the total of imports relative to the total of domestic production. ‡ Art XI(2)(c). domestic price support progs.3(b) para.permitted justification .

µto safeguard its external financial position and its µbalance of payments¶ (Art XII). ‡ Restriction on Quotas. . with provision for public notification and consultation with interested suppliers.fear of contravention with the non discrimination cls. XI. XII did not effect the basic thrust of Art XI. other than the US had significant balance of payments problems.Exceptions Cont¶d ‡ 2nd reason for import quotas. but by 1960s major currencies had become convertible and Art. GATT architects stated under Art XIII that quantitative restrictions to be applied on a non discriminatory basis. critics of GATT felt that Art XII could undercut Art. as most countries. ‡ In early stages.

¶ ‡ Efforts to streamline this µsafeguard mechanism¶ with respect to defining injury. and the 1994 Subsidies Code did not require the tariff concessions to be the causation factor. causation. including concessions. if measures would be subject to the MFN cls. any product is being imported into the territory of that contracting party in such increased quantities as to cause or threaten serious injury to domestic producers of like or directly competitive products.Exceptions Cont¶d ‡ (g) Escape Clause: Art. succeeded in the Uruguay round. XIX authorizes emergency action to impose a restriction on import of a particular product if. µas a result of unforeseen developments and of the effect of the obligations incurred by a contracting party. .

Exceptions Cont¶d ‡ (g) Customs Unions & Free Trade Areas: ‡ Debate. founding members of GATT were already part of a CU and the idea of a µunified and democratic greater Europe. Luxembourg. inconsistent with the MFN principle but at the same time they entail eliminating trade barriers inter se.CUs and FTAs by definition. ‡ In 1947-48 the Netherlands.¶ was being debated in the context of the reconstruction of Europe. Belgium. and thus consistent with GATT objectives. .

. as revised at the first of the Contracting parties during the Havana Conference in 1948. was to permit contracting parties to enter into CUs and FTAs provided‡ (i) that the arrangement must cover substantially all the trade b/t/ amongst parties (to avoid preferential or discriminatory deals).Exceptions Cont¶d ‡ Art XXIV. ‡ (ii) on the whole. tariff and other non tariff barriers be no higher or restrictive than the average of tariffs of the constituent territories before formation of CUs or FTAs.

.Exceptions Cont¶d ‡ (iii) if formation of CUs leads to the unbinding of prior bound duties then there is an obligation to negotiate with the beneficiaries of the concessions . ‡ Eg: European Economic Community (EEC) was the most important CU during the the age of GATT. ‡ (iv) if the CU is to be phased in there must be a plan and schedule to do so within a reasonable timeframe. in order to re-establish the prior balance. ‡ NAFTA is one of the most successful CU. .

¶ was an unfair trade practice and anti dumping duty by a importing country to offset was an apt defense. .Exceptions Cont¶d ‡ (h) Dumping and subsidies: ‡ GATT drafters generally agreed that µdumping. though. ‡ Drafters were not. µsales by an exporter at prices less than the home market price.¶ defined. but they did agree that an importing country was entitled to offset the negative effect by imposing a countervailing duty to balance the market. in agreement that government subsidized exports was unfair.

Exceptions Cont¶d ‡ Fears of anti dumping and countervailing duties becoming protectionist. Import quotas and punitive tariffs were not accepted. . ‡ Anti dumping and Countervailing duties permitted as an exception to the MFN and bound duty obligations. provided duties did not exceed the amount of dumping or subsidy and provided authorities of the importing country had made an explicit determination that as a result of dumping/subsidy an industry in the importing country had suffered or was threatened with material injury (Art VI(6)).

.Exceptions Cont¶d ‡ Subsidies Article was expanded as a result of the 1954-5 review session of the GATT to include a statement that a subsidy on the export of a product may have harmful effects for the other contracting parties. but that in any event such subsidies shall not be applied to bestow more than an equitable share of world export trade in that product and for other products CPs shall cease to grant subsidies. a statement that contracting parties should seek to avoid subsidies on primary products.

Exceptions Cont¶d ‡ (i) Waivers: ‡ Art XXV(5). ‡ US had waivers covering virtually all agri¶l products for 40 yrs till phased out pursuant to agricultural settlement reached at the Uruguay round since granted in 1955. upon approval by 2/3 majority. a CU. contrary to Art XXIV. XXIV was applied without any waiver. When EEC was formed in 1958 Art.avoidance of conflict of priorities. being sought. ‡ Eg: European Coal and Steel Community was granted a waiver in 1952. Waiver was subject to detailed annual reporting requirement and commitment that customs duties would be lower that general incidence.waivers could be granted by CPs acting together. . µin exceptional circumstances not elsewhere provided for in this Agrt.¶ ‡ Benefits.

if any CP should consider that µany benefit. to make recommendations or give an appropriate ruling. and help of the secretariat or a small group of neutral GATT experts to act as an arbitration panel. . GATT (and ITO) could facilitate disputes b/t CPs if possible through direct consultations.¶ matter may be referred to CPs.¶ accruing directly/indirectly is being µnullified/impaired. but if CPs think matter is serious then successful CP can suspend the application of any trade concessions on the aberrant CP. ‡ Art XXII.each CP µshall accord sympathetic consideration¶ to representations regarding any matter that may be made by another CP. No procedures laid out. as determined. ‡ Art XXIII.Dispute Settlement ‡ Originally conceived.

and only for the purpose of compensation.rare. a challenged measure violated GATT/ GATT Codes. ‡ 3rd. with the Secretariat participating gave way to the legal division after 1981. Retaliation.The previous dispute resolution through panels made up of delegates from third countries. . the preferred solution is a recommendation that the aberrant state modify or withdraw the violating act.Object-restoration of balance of payments.Dispute Resolution points‡ 1st. ‡ 2nd.If determined.Brief points. Retaliation in the form of the complainant state withdrawing some of the concessions was disfavoured as it would result in two barriers to trade.

importing country might make its offer subject to being µpaid.¶ After the lists were exchanged. to be taken into a/c in their own bilateral negotiations and preparation of revised lists. If an exporting country may benefit from a proposed concession.¶ and subsequently exchanged µoffer lists. ‡ Except.¶ by potential beneficiaries. they were made available to all participants. the 1st round. Evolution of GATT and GATT Law GATT Negotiating Rounds First Five Rounds (1947-61) (1947- .‡ Manner of negotiating: Each pair of countries exchanged µrequest list. the subsequent rounds had small but significant reductions in duties.

modest tariff cutting and conditions of new accessions. France. .. in April-Oct.. 1947 and had an underlying theme that the Contracting Parties should meet regularly to negotiate tariff reductions and other trade barriers. England 1950-51). Torquay. 1949. simultaneously resulted in the drafting of the General Agrt. ‡ 2nd and 3rd round (Annecy. held in Geneva.Negotiating Rounds Cont¶d ‡ The 1st round. including the recently established Federal Republic of Germany.

the US Congress had authorized President to negotiate duty reduction by only 15% of the duties in effect on January 1. ‡ Due to the fact that the US could not offer greater reductions.restrained by the fact that in the Trade Agreements Extension Act.Negotiations Cont¶d ‡ 4th Round. 1955 or to 50 % ad valorem. 1955. . the MFN and reciprocity principle u/GATT meant other states could not offer substantially more reductions.

Negotiation Cont¶d ‡ Close of the 4th round the Benelux countries. Market changed but did not weaken GATT. of the European Common market. ‡ European Eco. . France. Italy and Federal Republic of Germany met in Venice to consider and approve Spaak report for the est. ‡ Creation of the European Eco. and became a principle force to be reckoned with in GATT. Community created pursuant to the Treaty of Rome was in complete compliance with the CU requirements under GATT.

Negotiations Cont¶d (Dillon Round)
‡ 5th ( Douglas µDillon¶ Round) : 2 aspects‡ Another effort in multilateral tariff cutting, continuing from the prior rounds, but encouraged by the new US negotiating authority, permitting duty reductions of up to 20% from the January ¶58 level. ‡ Negotiation b/t the European Community and other GATT CPs u/Art. XXIV(6) about compensation for unbinding of duties of member states of the EEC, bound in prior GATT rounds.

Dillon Round Cont¶d
‡ EEC position- common external tariff on an item created by arithmetic average of previous duties of constituent states, as called for by Treaty of Rome, did not require any compensation to third countries, as it would balance out among the member states. ‡ Rejected. Principle was established that 3rd parties were entitled to make µitem-by-item claims for compensation pursuant to Art. XXIV(6) when CU was established/enlarged with admission.

Results of the Dillon Round
‡ Aside from agriculture, Dillon XXIV(6) round was regarded as successful, as the EEC was integrated into GATT, with no friction. ‡ Reduction of duties modest, and product-by-product negotiation-tedious. EEC had used across the board adjustments to complete eliminations inter se in transition and had suggested the same technique to GATT, but such a technique was inconsistent with US negotiating authority, which required individual reports by US Tariff Commission. Evinced interest to find an acceptable alternative. ‡ Object- preserve reciprocity and Non discrimination. Impetus from the US in the form of Trade Expansion Act of 1962 that stimulated the Kennedy Round.

‡ Trade Expansion Act of 1962. as the architects understood the effect of CUs even when they meet the Art. as a way to solve the Germany Problem and a way to strengthen Western democracies against the threat of Communism. high tariff zone detrimental to the US trading interests. but economically it feared that EEC would become a self directed. was to be µa new and modern instrument of trade negotiations. in the words of President Kennedy. XXIV requirements may deprive an outsider of the MFN and concessions previously paid for. .Kennedy Round (1964-7) (1964‡ US embraced EEC politically.

in May 1963. but states remained keen on implementing it. .Kennedy Round Cont¶d ‡ US government wanted to seek to limit the µtrade diversion effect¶ that will depend on the height of the common external tariff. ¶67. so as to have reciprocity b/t states was a problem. ‡ The decision to hold a new round of trade negotiations on the principle of linear or across-the-board tariff negotiations was finalized in a formal Ministerial Decision. ‡ US Cong. ¶62 until June 30. ‡ The manner in which tariff rates could be uniformly brought down. This meant moving away from the prior article-by-article negotiation and securing authority for across-the-board/ linear negotiations. Granted authority to reduce duty by up to 50% of rate existing on July 1.

Kennedy Round Cont¶d ‡ Issue of reciprocity became dominant in the negotiations.by averaging member countries¶ tariffs in the process of forming a common external tariff were in the medium range of 10-20% ad valorem. who would still constitute substantial restraint. . whereas British and US tariffs were widely distributed. when the EC pointed out that the tariffs on industrial products. and a 50% linear cut would leave most of its tariffs at relatively low levels compared to UK and the US.

and then would undertake to cut their duties by an agreed % of the difference b/t the actual and the target rate.¶ ‡ As linear reductions might fall unevenly on different products.leveling of the peaks.Kennedy round Cont¶d ‡ Solution: µécrêtement¶.a formula whereby the contracting parties would agree on target rates by major categories. ‡ But. . tariff structures and countries. reciprocity in this context was not discussed. the above formula was unacceptable as inconsistent with reciprocity and the US law requirements of µmutual trade benefits.

Linear reductions were to be equal.. 50% reduction for 5 year periods. ‡ Disparities. thus excluding about 12% of imports from negotiations..partial return to bilateral negotiations. with offers subject to reservations. and in case of significant disparities. and national security provs. ‡ Compromise Ministerial meeting. but excluding products subject to the escape cls.tariff negotiations would be based upon a plan of substantial linear tariff reductions with bare minimum of exceptions which shall be subject to confrontation and justification.e. .Kennedy Round Cont¶d ‡ US Congress granted the executive negotiating power.. i. they will be based on special rules of general/automatic application.

principle of reciprocity remained something to aspire for economically at the close of the round.Results of the Kennedy Round ‡ Negotiating round was a hybrid of productby-product and linear negotiations. ‡ Resulted in duty reductions on 20% of the dutiable products of the industrial countries. . about 2/3rd by 50% or more. ‡ But.

Tokyo Round and the Separate Codes (1973-9): Expanded Agenda (1973‡ In the aftermath of the Kennedy round and its results that became fully effective in 1970s. ‡ The new item on the agenda that needed attention was the Non Tariff Barriers. and through a formal Ministerial Meeting in Tokyo in September 1973. ‡ A Joint Declaration by the US and EC to the Director General of GATT urging a new round of negotiations was issued in February 1972. tariffs on industrial products had been reduced substantially. ‡ Declaration stressed. . another round was declared open.Overall Reciprocity and adherence to MFN cls.

‡ Eg: A CP might agree to open up opportunities for non-nationals to bid for its govt. as a µconcession.Separate Codes and MFN ‡ Overall reciprocity and well-balanced package suggested that since equality in all agreements is not possible. parties should aim for an overall settlement satisfactory to all participants. ..¶ to enable it to prevail on the issue of dumping. procurement projects to a greater extent than its own nationals would be allowed in the other country.

to create more specific understanding came up.Separate Codes and MFN Cont¶d ‡ Industrial Countries. the idea of developing µcodes. ‡ Therefore.¶ nominally in the implementation of provs. Canada and Japan were interested in all the subjects on the agenda for negotiations. .. of the General Agrt. EC. Codes would be binding only on signatories and they could pick the ones they wanted to adhere to.US. UK.. many other countries had no interest in NTBs. of signatories would be required to bring them into effect. to assuage all countries including the ones not in favor of some of the proposals set for negotiations on the agenda.. ‡ Although codes would be open to all CPs. no particular no.

international legislation could be completed in time.Codes and MFN Cont¶d ‡ Industrial states understood that such non compulsory codes. ‡ Government Procurement Code and Subsidies Code that conferred benefits on signatories. replaced the principle of unconditional MFN with a form of conditional MFN. top some extent. to some extent undermined the claim of GATT as a universal orgn. a a package deal could be put together where benefits granted. ‡ Advantage of Separate codes. . could be used to offset a perceived unsatisfactory result for that state on another subject.

but the Tokyo round Codes bridged the gap b/t GATT 1947 to GATT 1994. . by signing on to the agrt. as it had a vast subsidies program and wanted to prevent US from imposing countervailing duties on its exports. they had negative repercussions as well. ‡ Eg: in return for a stricter definition of subsidies and prohibition of export subsidies o non-primary goods in the Subsidies Code. ‡ Left a bad taste.. But. Brazil abused this benefit. the US agreed to amend its law to require independent finding of material injury to a domestic injury before imposing a countervailing duty.Effect of Conditional MFN ‡ Although the conditional MFN cls. And the separate code were designed to offer incentives for CPs to sign on.

. as a silent boycott to show their disappointment at the minor role that developing countries played. All industrial countries signed. but later in that year more countries signed after a resolution was passed to ensure µunity and consistency.¶ of GATT & that existing rights/benefits would be upheld and not affected by these separate agrts.Achievements and Failures of the Tokyo Round ‡ Final Act of the Tokyo Round was submitted for signature on April 12. 1979. amongst the developing countries signed at first. but only Argentina.

. in the face of other uncertainties like the collapse of the international monetary system. Procurement.Achievements and Failures Cont¶d ‡ Greatest achievement. ‡ International legislation on Subsidies and Countervailing Duties. recession and energy crises throughout both the developed and less developed world. Govt.Maintenance of µunity and consistency¶. These agrts. The fact of creation of a large body of law that was technical and important is the major achievement of the Tokyo Round . Technical Standards. and established committees of signatories to oversee their implementation and dispute settlement as well. on Dumping and Anti Dumping. contained substantive rules. Customs Valuation and Import Licensing.

‡ Tariff cutting principle.Tariff Cutting u/Tokyo round ‡ Although not the principle issue on the agenda. subject to an 8 year period of staging. the principle of linear tariff reductions was accepted and overall reciprocity was the guiding principle. higher the % by which it would be cut.higher the initial tariff. . it was understood that agricultural tariffs would not be subjected to any tariff cutting formula. ‡ In spite of agricultural exceptions and others.

. b/t importing and exporting states. or by industries in one/both countries with the tacit approval of the govts. ‡ Most argued issue.¶ Whether safeguards must be imposed on an MFN basis or could be imposed against a source of increased/excessive import only? ‡ EC wanted safeguards imposed selectively.¶ or µprinciple cause. but µthe cause. . measures of relief against sudden and unforeseen imports of a given product. i.¶ was being debated.. or agrt. and several versions of draft Code or an µOutline of an Arrangement¶ on safeguards was published near the close of the Tokyo Round.µSelectivity. on Code of Safeguards. ‡ States agreed that an international discipline for safeguards was needed. in the form of a quantitative restraint. Safeguards were imposed by importing state acting alone. ‡ CPs agreed that serious injury to domestic products was required. developing countries.Failure to achieve agrt. including Japan were not in favour and US was in the middle..e.Failures of the Tokyo Round ‡ Biggest drawback.

a Ministerial Declaration was agreed to initiating the 8th round of Multilateral trade negotiations. Supporters sought to undercut the protectionist trends in the US and chose to focus on new areas for the first time. US urged another round of GATT negotiations. ‡ Ministerial Meeting. . who feared that its µCommon Agricultural Policy. even before the developments from the Tokyo round were tried and tested. ‡ US urged that the new areas. IP and investment. ‡ US persisted. and in 1985.Uruguay Round (1986-93) (1986Heavy Agenda for the Round ‡ In 1982. a Preparatory Committee was charged with drafting a program for a new GATT round for submission at the Ministerial Meeting.services.Convened at Punta del Este in September 1986. ‡ Opposition came from the developing countries who felt let down by the Tokyo round and EC. After 5 days of arguments.¶ would be in jeopardy. . but was not harmonious to begin with. along with agriculture and safeguards be the agenda for the new round.

including banking. ‡ At the behest of India and Brazil. ‡ µRollback¶.elimination of trade restrictive/distorting measures previously taken without requesting GATT concessions. insurance. and reduce the pattern of subsidies and overproduction in some countries. while famine existed in others. NTBs. trade related aspects of investment regulations. ‡ Reform trade in agriculture.commitment not to take any trade restrictive/distorting measure. or take any measure in exercise of GATT rights µthat would go beyond requirement. ‡ US proposed a more definite and predictable method of enforcing rules and resolving disputes. of IP and of services. a/cing. ‡ µStandstill¶.¶ to remedy specific situations. . shipping and even legal services. negotiations on trade in services was separated into Part II of the Declaration. ‡ Address the safeguards problem and bring trade in textiles under the nominal GATT regime. (dispute resolution).Heavy Agenda Cont¶d ‡ Most ambitious round dealing with tariffs.

Group of Seven Eco. import barriers. elements.agriculture. was reached on 11 out of 15 topics.. A final meeting Ministerial meeting of the Uruguay round was to be held at Brussels in December 1990. ‡ July 1990. 4 topics evaded any agrt.. and the 4 contentious topics would also be negotiated.Developments of the Uruguay Round ‡ 15 subjects. and export subsidies. . After meetings in 1987 and 1988. both old and new were the topics of negotiation groups. textiles.. a Midterm Ministerial meeting was held in Montreal and agrt.levels of domestic support.. Summit held in Houston was stormy as US wanted reduction/elimination of subsidies of the Common Agricultural Policy followed by the EC in 3 imp. protection of IP and safeguards..

liberalize investment regimes. ‡ Warning in the Punta del Este declaration against µunwarranted cross sectoral demand. made it clear that that if they were not granted greater access for their agricultural products by the industrial countries. they were not going to open their markets to Western services.¶ was disregarded. .Developments of the Uruguay Round Cont¶d ‡ The developing countries. or grant IP protection (including patents on pharmaceutical and software). Trade in agriculture and agricultural subsidies seemed to be the most contentious issues.

much of the draft was tacitly agreed. and at year end 1991. with the understanding that nothing is agreed. Arthur Dunkel issued a Comprehensive Draft Final Act..Developments of the Uruguay Round Cont¶d ‡ November 1990.trade ministers from 107 countries met in brussels to bring the Uruguay round to a conclusion. ‡ GATT groups continued to meet. At a first appraisal meeting scheduled for January 1992. but to no avail. a document containing either agrts. Latin American Countries withdrew their delegates from working groups on IP and services to protest the deadlock on agriculture. with individual concessions. unless everything is agreed. . but US wanted precedence given to security concerns. Director-General. or feasible compromises. EC tried to buy out the Cairns Group.

turned out to be a major and continuing obstacle in 1992. covering GATT.. to be signed by all parties.. ‡ (iii) GATT to be placed in a firm organizational footing. The proposals are‡ (i) that the Balkanization of GATT law of the Tokyo round be reversed and all agrts. what eventually became the WTO.Developments Cont¶d ‡ Agriculture and particularly efforts to limit the subsidy programs of the European Community. ‡ (ii) Integrated system of dispute settlement. but 3 elements led to major eventual changes. and inclusive of all the associated agrts. . and codes with authority to9 retaliate.

1993. a renewed effort to complete the Uruguay Round was made. last day of the µfast track authority. . the successful completion of the Uruguay Round.¶ of the US executive branch. Peter Sutherland. covering important new areas of world economy was announced.Final Stage ‡ After NAFTA was passed. ‡ On December 15. The continuing controversy over agriculture was resolved with EEC agreeing to cut back on export subsidies more slowly. by DG. than previously understood. in return for imposed access to the European market for the US and other suppliers.

and negotiation of codes (agreements) on subsidies. customs valuation. govt.CPs moved well beyond trade in goods to include services.... ‡ Tokyo Round (1973-9). on trade in agriculture and the creation of the WTO.Summary of the Negotiating Rounds ‡ (1947-61). agrt. IP. on safeguards. transnational investment. agrt. ‡ Kennedy Round (1964-7)-attempt for linear tariff reductions based on reciprocity. . antidumping and countervailing measures. procurement.crafting rules applicable to NTBs affecting trade in goods.First 5 rounds.¶ (reciprocity).Emphasis was on tariff reduction based on MFN treatment and µmutual exchange of benefits. ‡ Uruguay Round (1986-93).

.GATT and Developing Countries ‡ Why has GATT failed to address the development needs of developing countries? ± a) the passive and defensive role of developing countries ± b) the lack of participation of developing countries in the exchange of concessions ± c) the focus of developing countries on Special and Differential treatment for developing countries as their main objective Alleged that for the large part developing countries had to become bystanders and many had acceded under article XXVI 5(c). which exempted them from having to negotiate concessions in order to enter.

GATT during the ITO ‡ GATT originally started out with 23 CPs out of which 10 were from developing countries. a trend unfavourable to the developing countries. ‡ Due to colonization and nascent newly independent countries a lot of the early bargaining/negotiations were done by the developed countries who µrepresented. By the Uruguay Round there were 76 developing countries participating and in the Doha round over 70% of the 153 members are currently developing countries.¶ the developing countries. .

‡ They tabled a wide range of proposals. did participate actively in the ITO negotiations. had no provisions on economic development.¶ ‡ Principle of reciprocity was debated. developing countries. The very first draft of the ITO charter proposed by the USA in December 1945.ITO negotiations by developing countries: reciprocity and MFN ‡ Notwithstanding the dominance of developed countries. . nor were there any rules or exceptions for developing countries. with developing countries raising concerns that they lacked the bargaining power to enable them to extract concessions of value from developed countries on a reciprocal basis and the developing countries inability to grant reciprocal tariff cuts of equal value should be considered.

US put forward its µproposed charter. stating that this should be adhered to unconditionally µonly. ‡ Both charters were in agrt. as to a ban on quantitative restrictions.¶ ‡ Brazilian delegation also put forth a µproposed charter.. but the US proposed a broad exemption on the ban for any agricultural product. and need for special measures to assist with development.ITO negotiations cont¶d ‡ ITO Charter negotiations in London in 1947. .¶ on behalf of the developing nations and engaged with the US on the MFN clause.¶ by countries in the advanced stage of development.

‡ During negotiations of the ITO in the UN ECOSOC. and so was never included in the final draft of the ITO Charter.¶ US rejected this amendment. developing countries were able to insert some amendments that called for the ITO negotiations to take into µa/c the special conditions that prevail in countries whose manufacturing industry was still in the initial stages of development. . some of the concerns of importance to developing countries was included in the final draft of the Charter at the Havana conference in 1948. ‡ However.ITO Cont¶d. It is partly this reason and the fact that the US did not have all its interests accepted that the US Congress rejected the ITO Charter initiated by it.

Early GATT rounds ‡ 3 major obstacles in the process of tariff bargaining/ exchange of concessions: ± (a) Principle of reciprocity ± (b) Principle-Supplier rule ± (c) Internal taxes and quotas of developed countries. .

principle supplier method of tariff negotiations by which a country could only be requested to make tariff cuts on a particular product by the principle supplier of that product to that country. and they also wanted to protect their infant industries that were in the early stages of development. But. ‡ ‡ . US Congress did not accept it and the US delegation argued for a system of reciprocal bargaining over specific tariff lines that required a product-by-product.Early rounds cont¶d ‡ US made it clear that it wanted MFN and reciprocity to be the foundational GATT principle and developing countries like India argued that due to the limited size of their domestic market their bargaining power was inadequate to induce concessions from developing countries. they did not produce in large quantities. Developing countries at the time were seldom principle suppliers of any product except raw materials that entered industrialized countries duty free. including the UK. Developing countries were effectively locked out and prevented from requesting concessions on products. Many countries preferred across the board tariff negotiations.

‡ Thus. But they were never on the agenda and quotas only increased for products that were of interest to the developing countries. industrialized countries increased their exports of manufactured goods and followed a policy of protectionism through a blend of GATT waivers on agriculture. . textiles and clothing.Early rounds cont¶d ‡ Internal taxes and quotas of the developed countries posed another problem as they were as high as 500% for products such as sugar.

enabled with certain conditions to use any measure not consistent with other provs.recognition of the balance of payment problems of developing CPs and flexibility for use of quantitative restrictions. for promotion of a particular industry. Section A. LDCs should use least trade disruptive measures and should use price based measures.developing CPs to modify or withdraw scheduled tariff concessions to promote est. at the review session of GATT (1954-55). . Assistance to Economic Development. Section C. Titled ³Govt. of a particular industry. like import surcharges and deposits rather than quantitative restrictions. Section B.´ created significant provs. Art..Article XVIII of GATT But. XVIII was revised to provide developing countries additional flexibility. Consultations by GATT BOP committee..

improvement in production and marketing methods.Haberler Report ‡ AT 1957 Ministerial session an expert panel headed by Prof. specifically ³failure of the trade of less developed countries to develop as rapidly as that of industrialized nations. CPs adopted a µDeclaration on the Promotion of trade of less developed countries in December 1961. Preferences in market access for developing countries. Careful observance of GATT or UN mandated limitations on disposal of commodity surpluses/ strategic stocks. ‡ . excessive short term price fluctuations of primary products and widespread resort to agricultural protectionism´ Report produced in October 1958. Gottfried Haberler was established to examine the trends in IT. Declaration called for sympathetic analysis of reciprocity of developing countries and technical assistance to expansion of trade among developing countries. Call for action in 7 areas‡ ‡ ‡ ‡ ‡ ‡ ‡ Speedy removal of quantitative restrictions effecting exports of LDcs Special attention to tariff reductions of products of primary benefit to LDCs Removal/reduction of fiscal duties in DCs Improved access of developing countries in purchases made by state agencies. Limitation of subsidies on export of primary products.

EEC sought exception for its emerging common external tariff. . ‡ Thus. Austria and Japan stated inability to comply by the December 1965 deadline and US stated that its national legislation only allowed for a reductions in tariffs over 5 year periods. and together with pressures from India and Brazil. 1963 resolution only resulted in a committee to investigate the revision of GATT for the benefit of developing nations. Resolution adopted on May 1963 called for a standstill on new tariff and non-tariff barriers. ‡ However. US and EEC fiercely opposed it. internal taxes were included in the Dillon round. ‡ Increasing barriers on agriculture and exclusion of agriculture from negotiations resulted in disappointing results for Developing countries ‡ In 1963 a Nigerian led group of developing countries (G21) proposed CPs to focus on targeting those barriers to trade identified as directly affecting LDCs.Dillon Round (1960-61) (1960‡ Haberler report recommended inclusion of internal taxes.

‡ Resulted in appro.. b/t principle suppliers to ensure reciprocity. while tariff cuts on cotton textiles was only 18% from the US and 22% from the EEC for developing countries. there were about 14 developing countries who made binding tariff concessions included in the GATT schedules. 35% tariff reduction in manufactured goods of industrial countries.Kennedy Round ‡ US Trade Expansion Act (1962) authorized US to negotiate across the board formula based negotiations. and semi finished industrial products. ‡ However. . they made the cut conditional on renewal of LTA that were imposed against the largest supplying developing countries into the developed markets. US chose a hybrid method that utilized across the board formula combined with substantial bilateral negotiations over the exception list. ‡ Developing countries could not participate as they were once again hampered by their lack of bargaining power. in spite of little progress on agriculture. which resulted in far greater concessions for the developed countries. Also.

µNon reciprocity.introduces prov.Part IV of GATT ‡ After a Special session of the contracting parties. for CPs to take certain measures in respect of trade interests of developing countries. 3 articles: ± Principles and objectives (Art. XXXVIII). XXXVII). and introduced a fourth protocol known as Part IV of GATT on trade and development. ± Joint Action (Art. (17th November to 8th February 1965). the CPs drew up a protocol amending GATT..¶ (para.need for conscious and purposeful effort on the part of CPs individually/jointly to improve access to the world markets for products of interest to developing countries.mandated access to world markets of primary products of developing countries. XXXVI). .8) where developed nations do not expect similar reciprocity for commitments from developing countries ± Commitments (Art.

± Refrain from introducing tariffs/ non tariff barriers on these products ± Remove requirement for reciprocity ± Create a Committee on trade and development to monitor progress being made in these areas. Important aspects: ± High priority to the reduction/ elimination trade barriers for goods of export interest to developing countries.Result ‡ A significantly reduced version of provisions submitted by the LDCs. and b/t developing countries themselves. both b/t developed and developing. . Part IV also created the basis for preferences for developing countries.

´ ‡ ITC (International Trade Center) was established to become an agency of UNCTAD and GATT. review application of provisions of Part IV. ³to collaborate with the UN and its organs in matters of trade and development policy. ‡ On 8th December 1971. ‡ The process of decolonization led to the creation of UNCTAD (1964). But. Part IV was best regarded as best endeavour undertaking with no legal force. a protocol relating to trade negotiations relating to GSPs b/t developing countries was finalized along with trade negotiations b/t developing countries.Part IV of GATT and UNCTAD ‡ Committee on Trade and Development was established in 1964. Part IV of GATT also agreed to establish institutional arrangements. .

VER¶s).Tokyo Round ‡ Developing countries participated by implementing restrictions in certain areas.(Voluntary export restraint. More than 800-850 NTB restrictions were in place by that time . Dominated the cotton sector and other primary products of importance developing countries. ‡ Problem for developing countries. as the round went beyond tariff reductions to include non tariff barriers.

Called for gradual liberalization and elimination of QRs.made a distinction b/t legal and illegal QRs. represented by Brazil and the 3 chairs. of GATT CPs. ‡ Thus multilateral approach to negotiations on QRs was abandoned in favour of bilateral talks. ‡ 2nd report presented by the US. .scrapped. This definition and distinction was not accepted by majority of the countries.Committee examining Quantitative Restrictions ‡ 2 reports: one synthesizing the proposals of developing countries. with only illegal QRs being subject to negotiations. the Council and the Committee on Trade and Development.

‡ Safeguards: Developing countries had a big interest. as developing countries refused to accept EECs demand that each member should have the right to impose unilateral safeguards on individual countries without multilateral approval. so Brazil and Nigeria presented proposals. 7% and 25% respectively from Hong Kong. Korea and Taiwan. . US further restricted the growth of its quota for developing countries further from 6% to 1-3% per yr. but negotiations broke down.Tokyo Round Cont¶d ‡ Developed countries made extension of MFA (Multi Fiber arrangement) a precondition for reduction of tariffs on textiles. ‡ EEC required the clothing and textile exports from the developing countries to be reduced to below 1976 levels requiring cuts of 9%.

that started at the end of the Kennedy round was provided a firmer legal basis through adoption of the Enabling Clause in 1979.Tokyo Round and the Enabling clause of 1979 ‡ Preferential treatment cls. at the time of GATT formation. (colonial preferences). ‡ US had agreed in 1969 to expand the GSP system to create its own GSP for developing countries that the EEC already had in place. Led to the formal legal recognition of the derogation from the MFN principle. ..

‡ Permanent legal authorization for the GSP preferences ‡ Preferences b/t developing countries ‡ Special treatment for developing countries from GATT rules and special treatment for LDCs..Provisions of the Enabling cls. . ‡ Developing countries refused to sign the codes reached by the Tokyo round until developed countries reached an agrt. to include special and differential treatment provisions for developing countries. US and other developed countries agreed under the guise of non binding assurances of technical assistance.

Result of the Tokyo round for developing countries
‡ Part IV (1965) and the subsequent enabling clause (1979) created a basis for the special and differential treatment prov., as a direct response to the failure of the developed countries to address key issues of interest to the developing countries, although the developing countries had already contributed to tariff reduction and exchange of concessions. They were mostly a best endeavour exercise without legal force. ‡ The US and EEC negotiated mutually acceptable outcomes with other members of the Quad (Japan and Canada). Therefore, exchange of concessions by the developing countries should be seen from the perspective of the stakes against them- agriculture, principle-supplier prob.,

Uruguay Round
‡ Developing countries understood the dangers posed by the new issues that were proposed by the US for inclusion into the new round. This is why they opposed the inclusion of these issues in the agenda. ‡ Developing countries, such as India and Brazil opposed the proposed extension of GATTs remit into services, IP and investment, as they argued that first action should be taken to remove VERs, the MFA and restrictions in Agriculture. This opposition was a major factor that resulted in the collapse of the 1982 Ministerial meeting. ‡ US pursued with threats of imposing unilateral restrictions under sec. 301 and also introduced subsidies to challenge the EEC. ‡ However, a group of 24 countries opposed the new agenda of services, TRIPs and investment, and instead called for a round that was confined to industrial products and agriculture, together with a standstill and rollback of protectionist measures that were not inconsistent with GATT.

Uruguay Round
‡ Agrt., by developing countries only after having secured agrt., that these issues would be discussed on a separate track from the negotiations on goods. ‡ Long negotiations at Punta del Este, b/t US, India and Brazil as principle participants, resulting in the emergence of a detailed procedural agrt., that ensured coverage of all the three subjects but separated them from traditional areas to be acceptable to India, brazil and other allies. ‡ Fact remains that Uruguay round was launched 5 years after the original call for a new round by the US was due to the stiff resistance by the developing countries.

results of ³market access negotiations. 1994. Concessions recorded in national schedules of concessions annexed to the UR Protocol GATT 1994.´ in which individual countries have made binding commitments to reduce/eliminate specific tariffs/NTBs to merchandise trade. 1st. ‡ Final Act covers all aspects negotiated at Punta del Este.´ on liberalization of trade in services. forming an integral part Final Act. with 2 exceptions. .UR cont¶d ‡ Final Act embodied on ministers in Marrakesh on April 15. 2nd. also recorded in the national schedules. it contains texts of Ministerial Declarations.³initial commitments. clarifying certain provs. in addition to the text of the Final Act.

‡ Tariffication process also provides for maintenance of current access opportunities and est. 24% in case of developing countries.Agreement on Agriculture ‡ 4 main portions... of mini. Reductions to be undertaken over a period of 6 years for developed countries and 10 years in case of developing countries and LDCs were not required to reduce tariffs at all. access tariff quotas where current access is <3% of domestic consumption. µTariffication¶ process tariffs and other tariffs on agricultural products to be reduced by 36% for developed countries.. reduction for each tariff line being required. on Sanitary and Phytosanitary measures (5) Ministerial Decision concerning leastdeveloped countries and Net Food importing Developing countries. on Agriculture (2) concessions and commitments members are to undertake on market access (3) domestic support and export subsidies (4) agrt. NT border measures replaced by tariffs that provide substantially the same level of protection. . with mini. ‡ Regarding market access.. which is to be extended 5% over implementation period..(1) agrt.

Agriculture cont¶d ‡ Agrt. and monitor follow up to the Decision on Measures Concerning the Possible Negative Effects of the reform programme on LD and Net Food Importing developing countries. ‡ Package calls for further negotiations in the 5th year. . sets up a committee that will monitor the implementation of commitments.. of implementation which would also consider special and differential treatment for developing countries.

Therefore. a special decision sets out objectives with regards to prov. on LD and NFIDcs . prov. Committee on Agriculture monitors the decision followup.. of basic foodstuffs in full grant form and aid for agricultural development. of food aid.. ‡ Also refers to assistance from the IMF and WB with respect to short term financing of commercial food imports.. Decision on Measures Concerning Possible Negative Effects of the Reform Prog.‡ Problems recognized.

new entrant small suppliers and LDcs.199597 inclusive.. ‡ Contains specific transitional safeguard mechanism which could be applied to products in yet integrated into GATT. All MFA restrictions as applicable would be carried over into new agrt. and maintained until restrictions are removed/product integrated into GATT.Agrt. Stage 2.2002-2004 inclusive). or unilaterally subject to review by Textile Monitoring Body. as agrt. Action u/safeguard mechanism could be taken by mutual agrt. . ‡ This integration is going to be in a phased manner (Stage 1. TMB. On Textiles and Clothing ‡ Object.1998-2001 inclusive an Stage 3.responsible gor implementation of commitments.. also provides for special treatment for certain categories of countries.Eventual integration of the textiles and clothing sectorwhere much of the trade is currently subject to bilateral quotas negotiated under (Multifibre Arrangement) (MFA) into the GATT on the basis of strengthened GATT rules and disciplines.

Agrt. including measures which require local procurement by an enterprise etc. ‡ Exceptions to the above present. On TRIMS ‡ Recognition that certain investment measures restrict and distort trade. ‡ Establishes a Committee on TRIMS to monitor implementation.. XI ( prohibition of QRs). Provides that no CP shall apply any TRIM inconsistent with Art III (national treatment) and Art. . ‡ Mandatory notification of all non-conforming TRIMS and elimination within 2 years for developed countries and 5 years for developing countries and 7 years for LDCs.

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