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Unit 10: GATT, WTO and Indian Economy

In short, it is important to note that members of GATT agree to decrease trade blocks and to Notes
eradicate discrimination in global trade so that, multidimensional and free trade may be
encouraged, leading to wider extents of world trade and prosperity.

Did u know? Agricultural subsidies in developed countries are of the order of one billion
dollars a day or about $350 billion dollars per annum. This figure, at the time of the
Uruguay Round, was stated to be around $ 250 billion. Thus, whatever be the exact figure,
there has been a significant increase in agricultural subsidies in developed countries.

10.1.2 GATT – Original 23 Signatories

You must remember that Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China,
Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand,
Norway, Pakistan, Southern Rhodesia, Syria, South Africa, the United Kingdom, and the United
States.
This first round of negotiations caused in 45,000 tariff reductions concerning $10 billion of trade,
about one-fifth of the then world’s total trade. The collective package of trade rules and tariff
concessions became recognized as the GATT which came into force in January 1948, whereas the
ITO Charter was still being discussed. But even beforehand the talks decided, 23 of the 50
applicants decided in 1946 to transfer to decrease and fix customs charges. These 23 countries
became the establishment GATT members (formally recognized as “contracting parties”).

Even though the ITO Charter was lastly decided at a UN conference on trade and employment in
Havana, in March 1948, approval in some countrywide legislatures showed impossible. The
most severe obstruction came from the US Congress, although the American government had
been one of the motivating forces behind ITO. It was at the Torquay Round that the United States
specified its incapability to support the awareness of ITO which in effect, showed to be its death
knell. Consequently, the GATT developed the only multidimensional instrument leading
international trade until the WTO was established on January 1, 1995.
You should keep in mind that for nearly half a century, the GATT’s simple legal principles
continued much as they were in 1948. There were accompaniments in the form of a segment on
development–added in the 1960s–and “plurilateral” agreements (i.e., with voluntary
membership) in the 1970s, whereas the efforts to decrease tariffs further sustained. Much of this
was attained finished a series of multidimensional negotiations known as “trade rounds”.
While the initial GATT trade rounds focused on decrease of tariffs, the focus extended when the
Kennedy Round, apprehended in the mid-sixties, brought about an anti-dumping arrangement
and a section on expansion.

10.1.3 Tokyo Round

It will be interesting for you to know that this Round – lasting from 1973 to 1979 with 102
countries contributing – perceived the first of main effort to tackle non-tariff fences of trade. The
outcomes comprised an average one-third cut in customs responsibilities in the world’s nine
main industrial markets, transporting the regular tariff on industrial products down to 4.7%.
The tariff decreases, projected to be executed in a phased manner over a period of eight years,
complicated an element of “harmonisation” – higher the tariff, greater the percentage of tariff
cut applicable.

It was in the Tokyo Round that a series of contracts on non-tariff obstructions developed from
the discussions. Because they were not acknowledged by the full GATT participation, they came

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