Page 44 - DMGT547_INTERNATIONAL_MARKETING

Unit 2: World Trade Organization

2.2.1 History Notes

The history of the GATT can be divided into three phases: the first, from 1947 until the Torquay
round, largely concerned which commodities would be covered by the agreement and freezing
existing tariff levels. A second phase, encompassing three rounds, from 1959 to 1979, focused on
reducing tariffs. 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.

Task Make a short report on GATT.

GATT 1947

The first version of GATT, developed in 1947 during the United Nations Conference on Trade
and Employment in Havana, Cuba, is referred to as “GATT 1947”. On January 1, 1948 the
agreement was signed by 23 countries: Australia, Belgium, Brazil, Burma, Canada, Ceylon,
Chile, the Republic of China, Cuba, the Czechoslovak Republic, France, India, Lebanon,
Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South
Africa, the United Kingdom, and the United States. 45,000 tariff concessions were made influencing
over $10 billion in trade which comprised 20% of the total global market at the time.

2.2.2 GATT 1947 in the US

The GATT, as an international agreement, is similar to a treaty. Under United States law it is
classified as a congressional-executive agreement. Based on the Reciprocal Trade Agreements
Act it allowed the executive branch negotiating power over trade agreements with temporary
authority from Congress. At the time it functioned as a provisional, but promising trade system.
The agreement is based on the “unconditional most favoured nation principle.” This means that the
conditions applied to the most favoured trading nation (i.e. the one with the least restrictions)
apply to all trading nations. In the US, there was large opposition against the International
Trade Organization (which had been ratified in several countries, including Australia), and thus
President Truman never even submitted it to Congress. This caused other countries to lose
interest and left the orphaned GATT as the world’s only multilateral trade agreement, coming
into force on January 1, 1948.

2.2.3 GATT 1949

The second round took place in 1949 in Annecy, France. The main focus of the talks was more
tariff reductions, around 5000 total.

2.2.4 GATT 1951

The third round occurred in Torquay, England in 1951. 8,700 tariff concessions were made
totaling the remaining amount of tariffs to three-fourths of the tariffs which were in effect in
1948.

2.2.5 GATT 1955–1956

The fourth round returned to Geneva in 1955 and lasted until May 1956. $2.5 billion in tariffs
were eliminated or reduced.

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