Gatt & Rounds

Southeast University Department of Pharmacy

ASSIGNMENT ON: GENERAL AGREEMENTON TARIFFS AND TRADE (GATT) Submitted to: Md. Shahid Sarwar Lecturer Pharmaceutical Marketing & Sales Department of Pharmacy Southeast university

Submitted by: Md. Waliullah Wali Id. 2010000300031 Batch- 15th(B) Department of Pharmacy Southeast University

Date: 20 December 2013

Table of Contents General Agreement on Tariffs and Trade............................................................................... 3 First Phase :.................................................................................................................... 5 Second Phase :............................................................................................................... 5 Third Phase :................................................................................................................... 5 OBJECTIVES OF GATT :.................................................................................................... 5 OBJECTIVES OF GATT :.................................................................................................... 5 FUNDAMENTAL PRINCIPLES OF GATT :............................................................................5 OTHER FUNCTIONS OF GATT :........................................................................................ 5 OTHER FUNCTIONS OF GATT :........................................................................................ 5 Did GATT succeed? :....................................................................................................... 6 Slide 20:......................................................................................................................... 6 Slide 21:......................................................................................................................... 6 Slide 22:......................................................................................................................... 6 Slide 23:......................................................................................................................... 6 Slide 24:......................................................................................................................... 6 Difference between GATT & WTO......................................................................................... 7

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General Agreement on Tariffs and Trade

GATT Stands for General Agreement on Tariffs and Trade. The GATT provided global trade rules as well as a framework for trade disputes from 1948 to 1994. It was one of three Bretton Woods organizations developed after World War II. The GATT secretariat consists of international trade specialists and an administrative staff. Tariff conferences and sessions are usually held at GATT headquarters in Geneva, Switzerland.[1] http://www.sweetliberty.org/gatt.htm It is a set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariff duties among the signing nations. The first round of negotiations impacted one fifth of world trade; there were 23 founding members. Originally signed by 23 countries at Geneva in 1947, GATT became the most effective instrument in the massive expansion of world trade in the later 20th century. By 1995, when GATT was replaced by the World Trade Organization (WTO), 125 nations had signed its agreements, which governed 90 of world trade. GATT's most important principle was trade without discrimination, in which member nations opened their markets equally to one another. Once a country and its largest trading partners agreed to reduce a tariff, that tariff cut was automatically extended to all GATT members. GATT also established uniform customs regulations and sought to eliminate import quotas. It sponsored many treaties that reduced tariffs, the last of which, signed in Uruguay in 1994, established the WTO. [2] http://www.answers.com/topic/general-agreement-on-tariffs-and trade#ixzz2ntpQt94b

The goal of GATT founders was to liberalize world trade, specifically by reducing protective tariffs. Corporations often argue for more open trade in order to have access to new markets. Labor often argues for trade restrictions in order to protect domestic jobs. Because trade agreements must be approved by governments, this tension sets up political conflict. http://uspolitics.about.com/od/politicaljunkies/g/GATT.htm UN agency for promotion of free trade between signatory countries. GATT instituted a rule-based multilateral trading system for trade in both goods and services through a series of negotiations (called 'rounds'). It succeeded in achieving reduction in the average tariff on manufactured goods from 40 percent to about 5 percent in the industrialized nations, and in obtaining varying degrees of promised reductions from less developed nations. Its approach was based on two non-discriminatory principles, the (1) Most favored nation and national treatment, and (2) Reciprocity. It worked to eliminate all non-tariff barriers and import quotas, and advocated use of countervailing duties to fight dumping and to negate the effects of subsidies. On January 1, 1995, after the culmination of Uruguay Round, GATT was replaced by World Trade Organization (WTO). http://www.businessdictionary.com/definition/General-Agreement-on-Tariffand-Trade-GATT.html

Purpose of GATT According to the Preamble of GATT, main objective was the “Reduction of Barriers to International Trade” This was achieved through the Reduction of Tariff barriers Quantitative Restrictions Subsidies on trade through a series of agreements. Although, other objectives of the contracting parties include,  raising standards of living  ensuring full employment  a large and steadily growing volume of real income and effective demand  developing the full use of the resources of the world  Expanding the production and exchange of goods.

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The General Agreement on Tariffs and Trade (GATT) was first signed in 1947, was designed -

   

To provide an international forum That encouraged free trade between member states By regulating and reducing tariffs on traded goods Providing a common mechanism for resolving trade disputes.

OBJECTIVES OF GATT :  To expand International trade by liberating trade.  Build an International trading system  to ensure orderly and equitable expansion of world trade and contribute to the prosperity of US.  Reduce foreign export subsides, tariff and non-tariff barrier and internal supports.  Cuts costs by 50 – 100% on important electronic items  To strengthen and clarify rules for agricultural trade.  To reduce subsidization for agricultural production.  Expansion of production and international trade.  Better utilization of resource of the world.

History : 3 Phases First Phase : From 1947 until the Torquay Round. Commodities which would be covered by the agreement and freezing existing tariff levels Year 1947 1949 1951

Place/name Geneva Annecy Torquay

Subjects covered Tariffs Tariffs Tariffs

Second Phase : A second phase, encompassing three rounds, from 1959 to 1979. Focused on reducing tariffs Second Phase Year 1960-1961

Place/name Geneva Dillon Round

Subjects covered Tariffs

1964-1967

Geneva Kennedy Round

Tariffs and anti-dumping measures

1973-1979

Geneva Tokyo Round

Tariffs, non-tariff “framework” agreements

measures,

Third Phase : The Third phase, consisting only of the Uruguay Round from 1986 to 1994. Extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born. Year

Place/name

Subjects covered

1986-1994

Geneva Uruguay Round

Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc.

http://www.authorstream.com/Presentation/prachi.agg15-135976-gattinternational-business-education-ppt-powerpoint/

GATT Round GATT members have engaged in eight intensive series of multilateral trade negotiations. Since the fifth series of negotiations (Dillon Round), multilateral negotiations under the GATT have been called the “XX Round Negotiations” or simply the “XX Round.” During the Doha Ministerial Conference, it was decided to launch a new series of negotiations. This series of negotiations is called the Doha Development Agenda, because some developing countries oppose the word “Round.” Figure II-4 outlines a brief history of trade liberalization negotiations. Tariffs were gradually reduced over the course of several negotiating rounds. In addition, trade rules other than tariffs were developed. In particular, the 6 | Page

Uruguay Round produced landmark results, including the strengthening of trade rules and the development of binding dispute settlement procedures. GATT round negotiations http://www.meti.go.jp/english/report/downloadfiles/2011WTO/2-0Overview.pdf

FUNDAMENTAL PRINCIPLES OF GATT : 1. Non Discrimination: No member country shall discriminate between members of GATT. Exceptions are allowed. 2. Prohibition of Quantitative Restrictions 3. Concept of consultation aims to avoid damage to trading interests of contracting parties. 4. GATT provides frame work within which the negotiations can be held for reduction of tariff another barrier to trade and structure for embodying results of such negotiations

OTHER FUNCTIONS OF GATT :

OTHER FUNCTIONS OF GATT Most Favored function status: Matters related to the tariff and related matters granted to any of the trading partner. Ensures that any tariff reduction or any other trade concession is extended to all GATT parties. National treatment: GATT members must give imported goods treatment equal to that of domestic goods. No restrictions on charges like rates may be applied to imported goods unless equally treated.

OTHER FUNCTIONS OF GATT : OTHER FUNCTIONS OF GATT Protection through tariff : Prohibits quantitative restrictions / Quotas. Contracting parties are expected to provide protection by means of tariffs which are transparent and subject to negotiations in the GATT. Dispute Settlement: Procedures from Uruguay round negotiations provides more automatic and effective resolution of disputes between member nations. http://www.authorstream.com/Presentation/padmaviji82-786755-gatt/

Did GATT succeed?

Slide 20: Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average Trade growth consistently outpaced production growth The rush of new members during the Uruguay Round demonstrated recognition of multilateral trading system as the anchor for development and an instrument of economic and trade reform. But…..

Slide 22: GATT’s success in reducing tariffs to a low level, with a series of economic recessions 1970-80’s drove governments to devise other forms of protection for sectors facing increased foreign competition High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade Both these changes undermined GATT’s credibility and effectiveness. 8 | Page

Slide 23: The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s . World trade had become far more complex and important than 40 years before The globalization of the world economy was underway Trade in services — not covered by GATT rules Ever increasing international investments

Slide 24: Factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration and the creation of the WTO.

Evaluation of GATT 1. When GATT was signed in the year 1947 only 23 nations were party to it. In the 1986, there were 117 were members. One of the principle achievement of GATT was the establishment of forum for continuing consultation. 2. GATT achieved considerable liberalization, few exception are as follow as: Agricultural trade was an exception to the liberalizations. Trade in agricultural became progressively more distorted by the support given to the farmers in agricultural sectors.  Another exception was textile: trade in textile was restricted by MFA. under MFA import of textile items, to number of developed countries was restricted by quota.  Developing countries with balance of payment problem have been generally exempted from liberalization. 3. The average level of tariff on manufactured products in industrial countries was brought down from 40% in 1947 to 3% in 1986. 4. The export of developing countries gained significantly less from the GATT agreement then did the export of developed countries

Difference between GATT & WTO GATT

WTO

1) It Stands for General Agreement on Tariffs and Trade 2) GATT was adhoc and provisional.

1) ) It Stands for World Trade Organization 2) WTO is permanent.

3) GATT has contracting parties.

3) WTO has members.

4) GATT system allows existing domestic, legislation to continue even if it violated GATT agreement.

4) WTO does not permit this.

5) GATT was less powerful and dispute settlement mechanism was less efficient.

5) WTO is more powerful and dispute settlement mechanism was more efficient

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References 1. http://www.sweetliberty.org/gatt.htm

http://www.answers.com/topic/general-agreement-on-tariffs-and trade#ixzz2ntpQt94b 2.