The Evaluation of GATT/WTO System with Reference to Developing Countries
Will Dannaoui
Griffith University
International Commercial Law
Introduction
International commercial law has undergone various evolutionary processes in the last fifty years or more. Although there have been political drawbacks in some cases, the existence of a framework to trade internationally is in itself a major achievement. Conceptually, the General Agreement on Trade and Tariffs (GATT) and the World Trade Organization (WTO) are one and the same thing: the former preceded the latter. GATT was formed in 1948 to guide trade between governments, not private parties. Then, 23 countries bought the idea of forming a charter for the International Trade Organization (ITO). By the time the charter was being drawn, the number of willing countries rose to 50. Moreover, only the 23 founding parties could open up tariff negotiations by the year 1946. These negotiations became the GATT in 1948. Although the ITO Charter was finally agreed upon at a UN Conference on Trade and Employment in Havana in the same year, it become tedious to domesticate the international law since governments were still contemplating whether to let go of some practices that, though economically beneficial to them, would be against GATT. Moreover, adoption of the laws by national governments became easier after the establishment of WTO.
This paper seeks to elucidate the GATT/WTO system of international law with reference to
WTO: World Trade Organization deals with the global trading rules between international governments. The overall rules must be predictable enough so that everyone involved isn’t dealing with chaotic sudden changes.
Unlike previous years of solely trading goods, the WTO allowed for trade to consist of property and services among different countries. Countries could now be globalized in all goods their country didn’t have through the use of free trade. The process of trading was revolutionized by new developments in technology as more and more countries began to trade.
“Free trade is not working for the majority of the world. During a most recent period of rapid growth in global trade and investment — 1960 to 1998 — inequality worsened both internationally and within countries. The UN Development Program reports that the richest 20 percent of the world's population consume 86 percent of the world's resources while the poorest 80 percent consume just 14 percent. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where the labor is cheapest and most easily exploited and environmental costs are low. This pulls down wages and environmental standards in developed countries that have to compete globally.”
The General Agreement on Tariffs and Trade (GATT) is a set of trade agreements. It was created in hopes for the abolition of quotas and the reduction of tariff duties among it's member nations. GATT’s most important principle was to trade without discrimination. GATT was succeeded by the World Trade Organization in 1995, formally going out of existence on April15,f 1994.
With trade being a constant issue with world relations, the World Trade Organization immersed. This contemporary organization is the only global intercontinental organization apportioning the rules of trade between countries. The WTO standards were negotiated and signed by the majority of the world's trading nations and ratified in their
The World Trade Organization was developed in 1995 out of what was known as the Uruguay Round. Although GATT set rules they mostly dealt with issues just involving simple trade of goods and the distribution of tariffs. The WTO has a broader job than the GATT; “…it oversees multilateral agreements relating not just to good, but also to services, investment and intellectual property.” (Douglas Irwin, 186) The World Trade Organization is an independent organization and decisions are made out of consensus of the member countries involved, not from the World Trade Organization itself. When a country complains about another country and the way they run things that could affect their home country, the WTO must make a decision on what must be done. Once a ruling has been made the losing country must implement one of three strategies:
Indeed, it has established the normative legal framework for multilateral trade in the four corners of the globe. As Matsushita notes ‘The WTO is the first international organization to bring about the rule of law in international trade in large scale backed up by the effective dispute settlement mechanism’. The over 300 hundred decision by the dispute settlement mechanism on various cases establishes an important corpus of legal precedent that serves as a frame of reference for the negotiation of Bilateral and Regional Trade Agreements. As a result, the fundamental principles underlying the WTO agreements, such as the MFN and National Treatment (NT) are here to stay and will continue to influence all future trade agreements. Hence, it can be agreed that the WTO has instituted the value system of free trade worldwide, such that the majority of the globe believes in trade liberalization and is willing to open up their economies to participate in free trade. Moreover, by creating a common trade language that almost every country understands, it has only made trading that much easier to negotiate. The existing agreements also provide a solid foundation for countries to build upon when drafting their own trade agreements, whether it is for free trade or preferential
In general, the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) were designed to do one thing: liberalize trade. Tariffs were first put in place to encourage the internal sale and consumption of produce goods and services. This benefitted many businesses within each country, but others struggled to create a market for their own goods when competing against government supported companies. Started in 1947, the GATT was designed to reduce the barriers erected against international trade and increase the flow of goods around the world. There have been several additions to the GATT over the years, but all were designed to continue the process of creating a more open global market. It allowed
The World Trade Organization was formed on January 1, 1995 however; its trade system is almost 50 years older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. The main purpose for the World Trade Organization is to offer a forum for negotiation of trade between member Governments. The bulk of these agreements came from the 1986-1994 Uruguay Round negotiations, as well as from the GATT. Currently, the WTO is host to a new set of negotiations under the “Doha Development Agenda” launched in 2001. At the center of the WTO, are the agreements reached between the majorities of the world’s trading nations. These documents provide legal guidelines (and rules) for international commerce and general business. These agreements are ultimately viewed as contracts, binding the participating governments to keeping their trade policies within agreed limits. The system’s overriding purpose is to help trade flow freely for the economic development and well being of participating governments and their countries.
In the 1940’s several organizations were created to help manage and regulate the global market place: The General Agreement on Tariffs and Trade (GATT); later the World Trade Organization (WTO); International Monetary Fund (IMF); and the World Bank.
If goods processed and sold in the country than tariffs only on parts imported. Foreign Trade Zones were created in the United States to provide special customs procedures to U.S. plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then reexported, and duty payment is deferred on items until they are brought out of the FTZ for sale in the U.S. market.
The World Trade Organization (or “WTO”) is a multi-national cooperative organization that provides a forum in which to discuss international trade. Member-nations agree to abide by rules decided through the WTO, and in return are allowed to vote on changes to those rules,
The GATT’s main function was not to resolve trade disputes, which is different from WTO, but rather to provide a set of rules that countries could at least publicly declared that they follow, therefore giving all signatories to the agreement
The origin of the WTO has its roots in the creation of the International Trade Organization (ITO) at the 1944 Bretton Woods ' Conference. While the terms of the ITO charter were being drafted and debated and countries pondered whether or not they would be a part of the organization, representatives from a group of 17 nations assembled in Geneva and concluded an interim agreement (GATT) to lower trade barriers and
On January 1, 1995, the WTO replaced GATT, which had been in existence since 1947, as the organization controlling the main trading system. The governments that had signed GATT were then called GATT contracting parties. When signing the new WTO agreements that had the updated GATT, which was called GATT 1994. These countries then