Contents

1. INTRODUCTION.........................................................................................................................

1.1 GENERAL AGREEMENT ON TARIFFS AND TRADE......................................................

1.2 WORLD TRADE ORGANIZATION.......................................................................................

1.3 THE INTERNATIONAL TRADE ORGANIZATION (ITO)................................................

4. THE GATT NEGOTIATION ROUNDS.................................................................................

5. TOWARDS THE MARRAKECH AGREEMENT .................................................................

1. INTRODUCTION
1.1 GENERAL AGREEMENT ON TARIFFS AND TRADE General Agreement on
Tariffs and Trade herein referred to as (GATT) was created in 1947 after the 2nd
World war1 , it was formed to cure the damage and destruction of the world
War which brought about an international Community that was searching for a
new beginning and a new International Order. At the end of World War II,
twenty-three countries, led primarily by the United States, Canada, and the
United Kingdom, negotiated the General Agreement on Tariffs and Trade whose
main purpose was to create an agreement that would ensure postwar stability
and avoid a repeat of the mistakes of the recent past, including the Smoot-
Hawley tariffs and retaliatory responses, which had been a contributor to the
devastating economic climate that culminated in the death and destruction of
the Second World War2 . The Countries engaging in the Geneva negotiations
that led to the signing of the GATT in 1947 were Australia, Belgium, Brazil,
Burma (Myanmar), Canada, Ceylon (Sri Lanka), Chile, China, Cuba,
Czechoslovakia (Czech Republic and Slovakia), France, India, Lebanon,
Luxembourg, Netherlands, New Zealand, Norway, Pakistan, South Africa,
Southern Rhodesia (Zimbabwe), Syria, United Kingdom, and United States3 .
GATT created a new basic template of rules and exceptions to regulate
international trade between members (referred to as contracting parties) Over
the next forty-seven years, more countries signed on to the GATT, and further
trade liberalization negotiations ensued. The GATT contracting parties began
and concluded eightseparate negotiating rounds of voluntary trade
liberalization. The first five rounds of GATT negotiations covering the initial
1947–61 period were typically dominated by major exporting countries.
Uruguay Round was the last round that ended the GATT era in 1994 by
ushering in the World Trade Organization. By 1994, the GATT membership had
simultaneously expanded from an initial 23 contracting parties to 128
participating countries4 .
1.2 WORLD TRADE ORGANIZATION World Trade Organization (herein after
referred to as WTO) is an International Organization that deals with
International/ global trade rules between nations. It came into being in 1995
making it one of the youngest International Organizations, it is the Successor of
the General Agreement on Tariffs and Trade (GATT). WTO was established in 1st
January 1995, after a series of trade negotiations that were held Under GATT,
the first series mainly dealt with tariff reductions but later negotiations
included other areas such as anti-dumping and non-tariff measures the last
series which is the Uruguay Round negotiations (1986-94) led to the creation of
WTO in 1995. The main function of WTO is to ensure that trade flows smoothly,
predictably, and freely as possible. It has been argued that the formation of
WTO reflected a fundamental change in the International Distribution of power
characterizing the Institutional transference from GATT to the WTO as a
structural or cultural shift from limited multilateralism to supernaturalism in
which the new regime embedded new socio economic and organizational
1.3 THE INTERNATIONAL TRADE ORGANIZATION (ITO) ITO emerged after the
Ruin of the 2nd World war, it was pioneered by the United stated and United
Kingdom in the era of Roosevelt (1933-1945) and Truman (1945-1952)
administrations5 . The US government engaged in a series of inter-agency,
public–private and Anglo-American meetings to explore the likely problems
and potential solutions in the post-war economic order and to come up with a
clear structure for International Organization devoted to trade Liberalization
The fourth point in Atlantic Charter of 1941 provided that the signatories would
“endeavor, with due respect for their existing obligations, to further the
enjoyment by all States, great or small, victor or vanquished, of access, on
equal terms, to the trade and to the raw materials of the world which are
needed for their economic prosperity.” The Master Lend– Lease Agreement of
1942, which was the principal instrument through which the United States and
the United Kingdom set the terms of US assistance during the war, provided in
Article VII that the two countries would pursue an agreement “open to
participation by all other countries of like mind … [for] the elimination of all
forms of discriminatory treatment in international commerce, and to the
reduction of tariffs and other trade barriers.” These commitments in principle
then led to a troika of economic and political conferences with the rest of the
allied governments: The Bretton Woods Conference (July 1944) created
theInternational Monetary Fund (IMF) and the World Bank, The Dumbarton
Oaks Conference (August-October 1944) produced The United Nations
Organization and The Havana Conference (November 1947-March 1948)
fashioned the Havana Charter for an International Trade Organization (ITO). The
formal initiative came three months after the end of hostilities with the release
in December, 1945, The US State Department’s Suggested Charter for an
International Trade Organization of the United Nations. In seven chapters and
79 articles, the proposal envisioned an ITO that would reduce tariffs, eliminate
quotas and preferences, discipline the use of other trade instruments, and deal
with such diverse subjects as labour rights, boycotts, exchange controls,
subsidies, restrictive business practices and commodity agreements. On 18th
February 1946 the Economic and Social Council of the United Nations decided
to call an International Conference on Trade and Employment, the Council
established a preparatory Committee to prepare for consideration at the
conference and an agenda and a draft charter for an international Trade
Organization. ITO was to have special responsibility for the regulation of trade,
including areas such as tariff reduction, business cartels, commodity
agreements, economic development and foreign direct investment. Among its
many accomplishments is the landmark General Agreement on Trade and
Tariffs (GATT) rules that were negotiated as part of the ITO framework. The ITO
also brokered the idea that political will was more important than rigid legal
codes and it established the principle that in the future, any viable trade
regime with hopes of survival would have to include escape clauses and
loopholes. Further, it created an open world trading order with scarcely a
mention of free trade in the Charter or in the GATT. It also recognized the
importance of labour standards and the developmental needs of the Southern
nations in its Charter. Among its other successes, the ITO pioneered the idea
that trade disputes had to be settled by consultation and mediation rather than
with legal clout. Finally, it established an institutional linkage between trade
and labour standards that would effect a major advance in global governance.
With the brief History of International Trade Organization, the Question that
arises is whether African Countries opinions were taken into Consideration in
the formation of the Principles, Rules and Regulations of the International
Trade Organization.
4. THE GATT NEGOTIATION ROUNDS The World Trade Organization and the
General Agreement of Tariffs and Trade have been the center of the most
extensive multilateral negotiations in trade history. The negotiations have
resulted in a sustained system of global trade governance from 1947 to date.
The composition and operation of the World Trade Organization is a result of
consistent negotiations between member states on a repeat basis. These
negotiations affected greatly import protection patterns, products and
industries within their member states. They envisioned an agreement that
would constitute a new global framework to regulate international trade. In
1947 the GATT introduced new rules and exceptions governing trade between
contracting parties and committed to reducing tariffs to ease international
trade.39 These negotiations acted as leverage for governments to accept
commitments on their own import tariffs in exchange for the reciprocal tariff
commitments of their principal trading partners. For each round a special
bargaining protocol is adopted, with explicit rules for the timing of events, the
kinds of interactions expected and the exchange of information among
participants.
The rounds are as follows; 1. Geneva Round (1947)
2. Annecy Round (1949)
3. Torquay Round (1951)
4. Geneva Round (1956)
5. Dillon Round- Geneva (1960-1961)
6. Kennedy Round- Geneva (1964-1967)
7. Tokyo Round- Geneva (1973-1979)
8. Uruguay Round- Geneva (1986-1994)
First Geneva Round (1947) The Geneva negotiation was the first instance of
these negotiations. The main objective was the reduction of tariffs to ease
trade. In Geneva, the General agreement was signed by the 23 founding
nations. It was the first ever attempt at writing rules for commerce and tariff
cuts on a fifth of world trade.40 The agreement signed here came into force in
January 1st 1948 with a temporary secretary as the International Trade
Organization was formed later. In March the same year, 53 countries agreed to
establish the International Trade Organization (ITO) adding it to the ranks of the
World Bank and International Monetary Fund (IMF). However, the US congress
delayed in approving the International Trade Organization agreement, which
made GATT the sole organization on global trade.
Annecy Round (1949)
This was the first round of negotiations under the newly formed GATT. These
negotiations focused primarily on reduction of tariffs and the 13 contracting
parties present agreed on five thousand tariff concessions
Torquay Round (1950-1951)
Between September 1950 and April 1951, 38 GATT members met in England to
further reduce tariffs. This round of negotiations resulted in 8,700 tariff
concessions effectively reducing them by 25% compared to the 1948 situation.
In 1950, the US did not seek congressional ratification of the Havana Charter
meaning the GATT was the only multilateral governing body on international
trade up to 1995 when the World Trade Organization(WTO) was formed.
Second Geneva Round (1955-1956)
This was the second round of negotiations to be held in Geneva. It lasted
between 1955 and May 1956. The twenty-six member states that took part
reduced or eliminated tariffs worth $2.5 billion.
Dillon Round- Geneva (1960-1961)
This round of negotiations was named after Undersecretary of State Douglas
Dillon as it was his idea. This negotiation involved twenty-six member states
and focused on harmonizing concessions to include the newly formed
European Economic Community, the forerunner to the European Union. The
negotiations were held in Geneva and when it ended on July 1962 it had
covered $4.9 billion of trade in about 4,400 tariff concessions.
Kennedy Round- Geneva (1964-1967)
This round of negotiation was named after American assassinated president J.
F Kennedy. In this round, the sixty-six nations participated covering more than
75% of global trade and lastedbetween 4th May 1964 and 30th June 1967. The
US congress passed the US Trade Expansion Act in 1962 which made it possible
for the white house to take part in multilateral negotiations on trade.42 In this
round, the following 3 elements were discussed;
1. Reduction in tariffs and elimination other trade barriers
2. Improving the world market for agricultural products
3. Expansion of outlets for the exports of less developed countries The round
was made possible by the American leader who was assassinated six months
prior to the negotiations. At the end of the round in 1967, a total of $40 billion
in global trade concessions were discussed.
Tokyo Round- Geneva (1973-1979)
The Tokyo round was launched in Japan in 1973 but the actual negotiations
took part in Geneva and included members from 102 countries. The
negotiations were centered at GATT’S continuous effort at reducing tariffs. The
most significant outcome was a reduction of custom duties in the nine major
industrial markets by a third. This move reduced the average tariff on industrial
products to 4.7%. 43The reduction was proportional to the size of the tariffs
meaning bigger tariffs suffered the largest cut. Unfortunately, this round did
not achieve expected goals on safeguarding farm trade but a series of
agreements on non-tariff barriers emerged from the negotiations, in some
cases interpreted existing GATT rules, in others it broke entirely new ground. In
this negotiation concessions were made on $19 billion worth of global trade
which took effect over an eight-year period. The Tokyo negotiations stands out
as the most comprehensive of the series as it covered agricultural products
which allowed developing countries to have a say in the discussion.
Member states also committed not to increase current tariffs which accounts
for more than $300 billion worth of trade.
Uruguay Round- Geneva (1986-1994) The eighth round is considered GATT’s
most ambitious round of negotiation that included 123 countries known as
contracting parties. This round focused on the liberation of the agricultural and
textile industries and other non-contemporary sectors such as trade in services,
intellectual property and investment policy. The Uruguay also led to the
formation of the World Trade Organization leaving the GATT as a principal part
of WTO agreements. The goals of the agreement were as follows:
1. Reduction of agricultural subsidies
2. Lift restrictions on foreign investment
3. Opening trade in services like banking and insurance
4. Protection of Intellectual property This round was crucial for world trade as
it identified many shortcomings of the GATT. It led to the formation of the WTO
which covered these new areas of trade that had not been explored in previous
negotiations such as agriculture and textiles.44 The USA and EU failed to reach
an agreement on the liberation of the agriculture sector and the negotiations
extended to 1964 when the Blair House Accord was signed by the 123 member
states bringing the WTO to life at a meeting in Marrakech, Morocco.
5. TOWARDS THE MARRAKECH AGREEMENT
The eighth round of negotiation culminated in the Marrakech agreement
which brought to life the World Trade Organization on 1st January 1995. The
WTO replaced the GATT as the sole multilateral governing body on global trade
due to the shortcomings of the GATT to handle certain issues that were
becoming crucial to world trade.45 Between December 1990 and April 1994
major developments took part to usher in the World Trade Organization. The
following four developments led to the discussion towards the Marrakech
agreement.
Presentation of the Draft Final Act
The Draft Final Act was presented to the GATT secretariat on 20th December
1991 and it reflected many formulations for which an agreement had not been
reached. The document demonstrated a lack of consensus within the GATT and
was put forward by director general Arthur Dunkel after whom the document
was named. In the draft, there was the MTO proposal whose basic structure
had not been agreed upon by the member states. It included the scope of the
MTO to settle disputes and sanctioned cross-retaliation. This includes measures
to leverage trade in goods to force markets open for goods and services on
unwilling party states. In the draft, there was also the TRIPS agreement with
many reservations and counterproposals by developing countries omitted. The
draft final act also incorporated the TRIMS’ review clause which exceeded the
scope and powers of the GATT agreement. In the end, there were very few
modifications to the draft since the ministers adopted a peculiar consensus
method which requires common consensus to depart from the draft final act.
Only agriculture matters were modified by the agreement of the two principals.
The rest of the draft remained untouched and was approved for adoption in
Marrakech. The presentation and ultimate adoption of the draft final act was
undemocratic and many legal provisions of the GATT were bypassed to
eliminate opposition. The fear that large number of party states could have
their way was the root of all these moves at suspending the normal operation
of the GATT