WTO and NAFTA Dispute Settlement Agreement Policies - Research Paper Example

Maintaining peaceful cooperation among the individuals and states of the world while ensuring full respect for human rights and sovereign equality is the most important reason for creating international trade agreements among individuals and nations.

There is a need for general rules to promote transactions among individuals, a need for result-oriented rules, procedures, and organizations to limit market failure, and a need for long-term constitutional rules of a higher rank that will protect the equal rights of citizens against abuses of policy-making processes and regulatory powers. All of these needs for the creation of rules have brought into existence international trade agreements that govern trade and commerce, protect human rights, and protect citizens against abuse of powers.

This paper will analyze in detail the historical account of trade agreements such as GATT, WHO, FTA, and NAFTA, the legal systems of the four multi-national processes, their dispute settlement systems, and the reasons behind why NAFTA is used in certain countries as opposed to GATT. Historical account of the General Agreement of Tariff and Trade (GATT)The General Agreement on Tariffs and Trade (GATT) was signed in the year1947 and was the result of a failure of negotiating governments to create the International Trade Organization which would govern international trade and commerce.

The GATT was established as a multilateral agreement regulating trade among more than 150 countries. The agreement was drawn out to present an international forum for member nations that encouraged free trade among them, by regulating and reducing tariffs on traded goods and providing a common mechanism and a set of rules for resolving disputes among trading parties. According to the GATT preamble, its main purpose is the “Substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis” The GATT operated as an actual organization conducting eight rounds of talks addressing multiple trade issues and resolving international disputes.

The Uruguay Round was completed on December 15, 1993, after seven years of negotiation and talks and resulted in an agreement among 117 countries that agreed to reduce trade barriers and create a more comprehensive and enforceable set of rules for world trade. The GATT agreement is considered to be the international counterpart to the United States tariff policy. The GATT agreement presented a code of conduct for international commercial relations. GATT committed its members to bring out trade liberalization through a process of consecutive negotiations and talks which were aimed at achieving cuts in protection levels.

The negotiations mentioned above were supposed to be based on the principles of non-discrimination and reciprocity. Negotiated concessions were extended to all member nations based on the ‘most favored nation’ clause and concessions made by one trading partner were to be balanced by concessions from other negotiations. The original GATT agreement aimed to gradually phase out all non-tariff protection measures to ensure transparency of those protectionist measures. The primary rules of the GATT were that there should be no discrimination between different foreign countries that are members of the agreement, that protection should chiefly be by the tariff, and that the tariff rates must be negotiable.

The code of conduct put forth by the GATT agreements came to being in the non-discriminatory application of negotiated tariff cutbacks. These tariff reductions were agreed upon at the major rounds of tariff and trade negotiations and talks which came after the changes proposed to the US trade agreements legislation. Between the years 1947 and 1967, there were six rounds similar to the above-mentioned one, and the seventh one was in progress in the mid-1970s. The tariff rates negotiated and agreed upon during the rounds are out down in schedules for each country.

For example, all tariff rates in the UK are put down in Schedule XIX and for the US the tariff rates are put down in Schedule XX. This has made GATT an archive of negotiated tariff rates for each of its member nations.