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Examine the role played by the GATT and the World Trade Organisation (WTO) in regulating international trade. What were the difficult issues it faced in the Doh - Essay Example

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The General Agreement on Tariffs and Trade (GATT), first signed in 1947, was initiated to provide an international platform to promote free international trade through tariff reduction and act as a mechanism for settling trade disputes between its member nations…
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Examine the role played by the GATT and the World Trade Organisation (WTO) in regulating international trade. What were the difficult issues it faced in the Doh

Download file to see previous pages... The agreements are arrived at through a series of negotiating 'rounds', which are named after the location where the talks take place. The current round of talks are known as the Doha Round after Doha Qatar and include negotiations on goods, services, and intellectual property.
In 1947, several nations came together in the post World War II environment to remove protectionist tariffs and foster international trade co-operation. GATT has never been recognised as an official international organisation and refers only to the body of agreements among its member nations. GATT's primary mechanism for regulating and stimulating international trade has been tariff reduction and elimination. "In the late forties, the average duty on industrial products imposed by developing countries was around 40 per cent ad valorem. As a result of the Uruguay Round and the previous Rounds, the average duty is as low as 3.9 per cent" (United Nations Conference 2003, p.45). While GATT experienced much success through the reduction of tariffs, many nations remained reluctant to enter into agreements that addressed other aspects of trade.
The initial agreements were successful not only by freezing and reducing tariffs; they also discouraged the formation of preferential trade agreements. GATT was based on the concept of the "Unconditional Most Favored Nation" (MFN) status. This policy mandated that all members treat each other member with the same status as their most favoured trading partner. This gives equal access to all members and stimulates open trade. Some preferential agreements, based on geographical proximity, have been allowed under GATT. The European Economic Community (EEC) was a regional trade bloc that grew out of the European Coal and Steel Community (ECSC). Though it promoted preferential regional trade, it was allowed under a waiver of GATT's no-new-preferences rule (Kenwood 1999, p.285). Lower tariffs and equal access to markets is the foundation of GATT.
Though the preamble of the GATT states that its purpose is the "reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce", the agreements spread into many other areas (University of British Columbia 1998). One of the main thrusts of GATT has been the elimination of quantitative restrictions. Quotas and import restrictions had placed a serious impediment to world trade in the years 1913-1950. Quotas were even more damaging to trade than tariffs because they set a strict limitation on trade. GATT addressed this issue by condemning quantitative trade restrictions except for extreme situations such as short-term balance of payment purposes and for the protection of 'infant' industries (Kenwood 1999, p.242). The reduction of tariffs and the elimination of quantitative restrictions were primarily responsible for the UK's global trade growth in the last half of the 20th century. In the period 1913-1950 the UK had a negligible export growth rate. Under GATT the growth rate had increased to 5% for the period 1990-1996 (Kenwood 1999, p.24).
GATT has also addressed other issues that promote free trade and the fair treatment of its members. The Uruguay round, 1986-1994, was designed to meet the challenges of technology and communications. The talks were directly responsible for $740 billion in tariff cuts and it has been estimated that global trade would increase by $270 billion a year and that the world would be over $500 billion ...Download file to see next pagesRead More
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