GATT&WTOKeys of Global Trade Liberalization

NAME OF PRESENTERGRADE LEVEL

BRIEF HISTORY

COUNTRIES

EXPANSION OF TRADE

1940s post-war period was a boom for trade and rising globalization. It urged several previously stagnant countries into trading with other countries.

BRIEF HISTORY

COUNTRIES

EXPANSION OF TRADE

In the past, trading was a way for most countries to gain access to resources not available to them. Though, several resource-rich countries have more complex economic agenda when it comes to trade.

BRIEF HISTORY

COUNTRIES

EXPANSION OF TRADE

Those countries take advantage by imposing very high tariffs on trade in goods. No one can complain because of the absence of trade standards and a governing authority for trade.

BRIEF HISTORY

COUNTRIES

TRADE SUPERVISION

By 1944 and the years to come, many initiatives to create a governing body for global trade have been done.

INTERNATIONAL INSTITUTION OF

TRADE

ITO

GATT WTO

INTERNATIONAL TRADE ORGANIZATION (ITO)

ITO was a proposed organization that would serve as the supervising and negotiating body for global trade.

It was proposed together with the creation of the International Monetary Fund and the World Bank in the 1944 post-World War II negotiations, but only the ITO did not push through.

CREATION TIMELINE

GATT WTO

CREATION TIMELINE

GENERAL AGREEMENTS ON TARIFF AND TRADE(GATT)

Succeeding the failed ITO was the GATT, which was created on April of 1947 at the UN negotiations in Geneva.

For 47 years, GATT helped establish a strong and prosperous trading system that became more and more liberal through rounds of trade negotiations.

GATT WTO

CREATION TIMELINE

GENERAL AGREEMENTS ON TARIFF AND TRADE(GATT)

These negotiations / trade rounds include:• Annecy (April 1949)• Torquay (September 1950)• Geneva II (January 1956)• Dillon (September 1960)

• Kennedy (May 1964)• Tokyo (September 1973)• Uruguay (September 1986)

GATT WTO

CREATION TIMELINE

GENERAL AGREEMENTS ON TARIFF AND TRADE(GATT)

Although it did not actually answer the call for an independent third party global trade governing body, since GATT is only a set of rules, it was good enough to support the rapidly growing multilateral global trading system from 1949 to 1994.

GATT WTO

CREATION TIMELINE

GENERAL AGREEMENTS ON TARIFF AND TRADE(GATT)

But by the 1980s, the system needed an overhaul. It was no longer relevant to world trade as it was 40 years ago. The trading network expanded and became more complex, outpacing the GATT that needed time-consuming rounds of negotiations to tackle trade problems that are piling up rapidly.

GATT WTO

CREATION TIMELINE

GENERAL AGREEMENTS ON TARIFF AND TRADE(GATT)

During the last GATT trade round in Uruguay in 1994, participants already agreed upon the establishment of the World Trade Organization (WTO), finally having an institutional body to overlook the expanding global trading system.

WTO

CREATION TIMELINE

WORLD TRADE ORGANIZATION (WTO)

By virtue of the Marrakech Agreement in Morocco, the WTO finally came into force on January 1, 1995, with the 75 existing GATT members and other European communities acting as the founding countries.

Bahrain was one of those WTO founding countries.

WTO CREATION TIMELINE

WORLD TRADE ORGANIZATION (WTO)

The other 52 GATT members rejoined the WTO after 2 years.

The organization now has 153 members, representing more than 97% of total world trade.

The World Trade Organization (WTO) is not a simple extension of

GATT; on the contrary, it completely

replaces its predecessor and has a very different character.

MAIN DIFFERENCES

GATT WTO

GATT was just a set of rules, with no institutional

foundation.

WTO is a permanent, independent institution.

MAIN DIFFERENCES

GATT WTO

GATT was applied only on a temporary

basis, even if governments treated

it as a permanent commitment for more

than 40 years.

The WTO signatory

commitments are full and permanent.

MAIN DIFFERENCES

GATT WTO

GATT rules applied to trade in merchandise goods ONLY.

WTO rules apply to 3 specific fields: trade in merchandise goods, trade in services and trade-related aspects

of intellectual property.

MAIN DIFFERENCES

GATT WTO

Many of agreements under GATT are plurilateral, or

selective, in manner. Countries separate in

groups and form agreements among

themselves.

WTO agreements are mostly multilateral,

thus every member is obliged to commit to the provisions of the

organization.

MAIN DIFFERENCES

GATT WTO

The old GATT system of settling disputes among members was relatively slow.

The WTO dispute settlement system has

specific time limits and is therefore faster. It

operates more automatically, and has

more detailed rules on the process of implementation

of findings.