GATT and WTO: Report Guide

8/9/2019 GATT and WTO: Report Guide

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[SLIDE 1]

The idea of the presentation is to assess and present the relationship

between two multinational bodies that play and have played a big part in

the pursuit for free trade or trade liberalization, the General

Agreement on Tariffs and Trade (or GATT) and the World Trade

Organization (known as WTO). But before we can actually do that, we must

first go back to its historical background, in order to find out the

purpose of the establishment of these bodies, what problems have risenin the past that paved the way to their creation.

[SLIDE 2]

The end of World War II marked the end of economic nationalism. This

meant countries would maintain their national interest, but trade blocks

and economic spheres of influence would no longer be their means. It wasa boom for trade and rising globalization. Open markets were encouraged.

It urged several previously stagnant countries to engage in trade.

[SLIDE 3]

The main concept of trade, in the past and maybe up until now, is to

gain access to certain goods and resources not available on your home

territory or possession. Though as centuries passed , it served more and

more purposes, like (1) to strengthen ties with other countries, or ( 2)

to further economic development, since trading could be a mean of

expanding resources. Several resource -rich countries even have morecomplex economic agenda when it comes to trade.

[SLIDE 4]

One of the most common problems encountered in trade back t hen was the

uncontrolled imposition of tariffs on trade goods. Some countries have

very high tariffs. Barriers were formed and trade slowed down. No one

can complain because of the absence of internationally -recognized trade

standards and a universal gover ning authority for trade.

[SLIDE 5]

And by 1944, many initiatives to create this said universal trade -governing authority have been done.

[SLIDE 6]

In order to fully understand how GATT and WTO came to be, it isimportant to first discuss the ITO or th e International Trade

Organization.

The post-World War II negotiations in Bretton Woods, New Hampshire, USA,

which was attended by 44 Allied Nations, sought to establish three


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things: the World Bank, the International Monetary Fund, and the

International Trade Organization. The ITO was a proposed organization

that would serve as the supervising and negotiating body for global

trade. If ever established, it would be the very first international

institution for trade. But unfortunately, it never pushed throug h.

[SLIDE 7]

While the ITO was scrapped, the UN negotiations in Geneva found asolution by establishing a set of standards or rules for global trade,

now known as General Agreements on Tariffs and Trade (GATT), the soon -

to-be successor of the failed ITO.

Now that ITO is officially denied, there still remains the absence of a

real, independent, trade governing body. But still, GATT served as the

de facto internationally-recognized body for negotiating global trade.For 47 years, GATT helped establish a st rong and prosperous trading

system that became more and more liberal through rounds of negotiations,

or what they call trade rounds.

[SLIDE 8]

These trade rounds include negotiations in Annecy (April 1949, Torquay

(September 1950), Geneva II (January 1956), Dillon (September 1960),

Kennedy (May 1964), Tokyo (September 1973), and Uruguay (September

1986).

[SLIDE 9]

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.

[SLIDE 10]

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 arepiling up rapidly. One good example is the rise in trade in services,

which was not covered by the GATT.

[SLIDE 11]

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.


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[SLIDE 12]

And so drafters came into full force after the Uruguay trade round.

In 1995, 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.

[SLIDE 13]

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.

[SLIDE 14]

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

on the contrary, it completely replaces its predecessor and has a verydifferent character.

[SLIDE 15]

And by mentioning that, we now are to present the differences between

the old GATT and the new WTO.

1. GATT was a set of rules, a multilateral agreement, with noinstitutional foundation, onlya small associated secretariat which

had itsorigins in the attempt to establish an InternationalTrade

Organization in the 1940s. The WTO is apermanent institution with

its own secretariat.

[SLIDE 16]

2. GATT was applied on a " temporary basis"even if, after more thanforty years, governmentschose to treat it as a permanent

commitment. TheWTO signatory commitments, on the other hand, are

full and permanent.

[SLIDE 17]

3. GATT rules apply to trade in merchandise goods only. WTO rules, onthe other hand, apply to 3 fields: trade in merchandise goods,

trade in services, and trade -related aspects of intellectual

property.


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[SLIDE 18]

4. While GATT was a multilateral instrument, bythe 1980s many newagreements had been addedin a plurilateral, and therefore

selective, manner.The agreements which constitute the WTO arealmost

all multilateral and, thus, involvecommitments for the entire

membership.

[SLIDE 19]

5. The WTO dispute settlement system is faster because it imposesspecific time limits,more automatic, and thus much less susceptible

toblockages, than the old GATT system. Theimplementation of WTO

dispute findings willalso be more easily assured.

Documents

GATT and WTO: Report Guide