Running Head: TRADE LAW 1

Trade Law: WTO Law

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Trade Law: WTO Law

The General Agreement on Tariffs and Trade (GATT) concluded by 23 countries in Geneva

in 1947 involved a set of multilateral trade agreements aimed at the reduction of tariff duties and

abolition quotas among the contracting nations. The interim arrangement was to take effect on

January 1st 1948, pending to the formation of the United Nations, which was to replace it.

However, GATT was amplified and enlarged further at several proceeding negotiations when the

United Nations agency failed to emerge. GATT played a major role in massive expansion of

word trade, and subsequently proved to be the most effective world trade liberalization

instrument in the second half of the 20 th century. The GATT had become a code of conduct,

governing 90% of world trade when it was replaced by World Trade Organization (WTO) in

1995, having 125 countries that were already signatories to its agreement.

The principles aimed at the formation of GATT were as follows:-

To encourage full employment and large and continuously growing volume of effective

demand and real income.

To increase the world production of goods.
To promote the living standards of people in member countries.
To settle disputes within the framework of GATT through consultation.

The members of the GATT were to enter into reciprocal and mutually advantageous

arrangements directed to the elimination of discrimination treatment in international commerce,

substantial reduction of tariffs, and other barriers of trade, in order to achieve these objectives.

Trade without discrimination was the most important principle of the GATT in which each

member country opened its markets equally to each other. Once a nation with its largest trading

partners had agreed to reduce tariff, that tariff was extended automatically to every other member
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of GATT as embodied in unconditional most-favoured nation clause. Specific tariff concessions

of each contracting nation were included in GATTs long schedule, representing tariff rates that

each country had agreed to extend to others. Protection through tariffs rather than through import

quotas or other trade quantitative restrictions was another fundamental principle of the GATT.

The trade quantitative restrictions were eliminated through the regulation laid down by the

GATT. Other regulations of the GATT involved the obligation of each contracting country to

negotiate for tariff upon the request of another and uniform customs regulations. If domestic

producers suffered excessive losses as a result of trade concessions, an escape clause allowed

contracting company to alter agreements.

Normally, GATTs business involved negotiations on specific problems affecting trading

nations or particular commodities. However, major multilateral trade conferences to work out

tariff reductions and other issues were held periodically from 1947 to 1993 starting with those

held at Geneva Switzerland in 1947, which addressed signature on first GATTs agreement; at

Annecy France 1949, which discussed tariff reductions on specific products; at Torquay England

in l950, which discussed tariff reductions on specific products; at Geneva in 1956; at Geneva in

1960-1961 ( Dillion Round), which discussed induction of European Community for the first

time, and 20% tariff reduction; at Geneva in 1964-1973 (Kennedy Round), which addressed 33%

reduction restrictions on manufactured goods; at Geneva in 1973- 1979 (Tokyo Round), which

discussed non-tariff restrictions, and the Uruguay Round in Geneva 1986-1994, which addressed

issues on Agriculture.

These agreements were successful in reducing average tariffs on the industrial goods from

40% in of their market value in 1947 to less than 5% in 1993. The most ambitious set of trade-

liberalization agreements in GATTs history was negotiated in the Uruguay Round, which saw
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the slashing tariffs on industrial goods by an average of 40%, reduced subsidies in Agriculture,

and lessened new agreements on trading services. The worldwide trade treaty adopted at the end

of the Uruguay Round created a new and stronger organization; the World Trading Organization

(WTO) to regulate and monitor international trade in 1994 (Arthur, 2007).

The WTO agreements signed by ministers representing the 124 Governments and the

European Communities in the Uruguay Round of Multilateral Trade Negotiations at the

Marrakesh meeting in April 1994 adopted the following.

Ministers embraced the historic achievement represented by the conclusion of the Round

which they believed will strengthen the economy of the world, increase trade,

employment, investment and income growth throughout the world. They adopted

stronger and clearer framework for conduct of international trade which involved more

effective and reliable mechanism for settling disputes.

A new era of global economic cooperation was affirmed through the establishment of the

World Trade Organization (WTO) which reflected the widespread desire to operate in a

fairer and more open multilateral trading system to benefit and promote welfare of their

people. The trade liberalization and strengthened rules achieved in Uruguay Round were

believed to lead to a progressively more open environment for trading. The ministers

agreed that they would not undertake with immediate effect any measures that would

undermine or affect the results of the Uruguay Round negotiations until the entry into

force of WTO.
The resolution to strive for greater and global coherence of polices, in the field of trade,

money and finance was reached. The resolution involved cooperation between the

International Monetary Fund (IMF), World Bank and the World Trade Organization.
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The participation in the Uruguay Round in which the developing countries actively

participated was highly welcomed and was considered to be wider than any previous

multilateral trade negotiations. A more balanced and integrated global trade partnership

was marked by the historic step of the Uruguay Round of negotiations.

A more favorable treatment for developing economies, which included paying attention

to particular situation of developing countries was recalled by the ministers through

embodied provisions of the negotiations. The importance of the implementing these

provisions to the least developed countries was recognized in ministerial meeting and

declared the intention to continue to assist and promote the expansion of their trade and

investment opportunities. A regular review by the Ministerial Conference and WTO

organization was agreed on the impact of the results of the Round in less developed

countries as well as food-importing developing countries.

The signature of the Final Act Embodying the Results of the Uruguay Round of

Multilateral Trade Negotiations and adoption of associated ministerial decision was

declared in the meeting.

Ministers expressed their sincere gratitude to His Majesty King Hassan II for his success

of the ministerial meeting and his government and citizens from Morocco for their

excellent organization and hospitality they provided.

The ministers declared that the work of the Trade Negotiations Committee was complete

with the adoption and signature of the Final Act and opening for the acceptance of the WTO

Agreement and concluded the Uruguay Round.

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References

Arthur, E. & Michael, G. (2007). The World Trade Organization: Legal, Economic and Political

Analysis.

Petros, C. & Sykes, O. (2005) 3rd Edition. The WTO and International Trade Dispute Settlement.

Page 37-41.