3. The gatt years

GATT helped establish a strong and prosperous multilateral trading

system that became more and more liberal through rounds of trade

negotiations. But by the 1980s the system needed a thorough overhaul.

This led to the Uruguay Round, and ultimately to the WTO.

GATT: ‘provisional’ for almost half a century

From 1948 to 1994, the General Agreement on Tariffs and Trade

(GATT) provided the rules for much of world trade and presided over

periods that saw some of the highest growth rates in international

commerce. It seemed well-established, but throughout those 47 years, it

was a provisional agreement and organization.

The original intention was to create a third institution to handle the

trade side of international economic cooperation.

Basic legal principles

The GATT became the only multilateral instrument governing

international trade from 1948 until the WTO was established in 1995.

For almost half a century, the GATT’s basic legal principles remained

much as they were in 1948. There were additions in the form of a

section on development added in the 1960s and “plurilateral”

agreements (i.e. with voluntary membership) in the 1970s, and efforts

to reduce tariffs further continued. Much of this was achieved through

a series of multilateral negotiations known as “trade rounds” – the

biggest leaps forward in international trade liberalization have come

through these rounds which were held under GATT’s auspices.

Trade Negotiations Committee, Geneva

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In the early years, the GATT trade rounds concentrated on further

reducing tariffs. Then, the Kennedy Round in the mid-sixties brought

about a GATT Anti-Dumping Agreement and a section on

development. The Tokyo Round during the seventies was the first

major attempt to tackle trade barriers that do not take the form of

tariffs, and to improve the system. The eighth, the Uruguay Round of

1986–94, was the last and most extensive of all. It led to the WTO and

a new set of agreements.

Did GATT succeed?

GATT was provisional with a limited field of action, but its success

over 47 years in promoting and securing the liberalization of much of

world trade is incontestable.

Continual reductions in tariffs alone helped spur very high rates of

world trade growth during the 1950s and 1960s – around 8% a year on

average. And the momentum of trade liberalization helped ensure that

trade growth consistently out-paced production growth throughout the

GATT era, a measure of countries’ increasing ability to trade with each

other and to reap the benefits of trade. The rush of new members

during the Uruguay Round demonstrated that the multilateral trading

system was recognized as an anchor for development and an instrument

of economic and trade reform.

GATT’s success in reducing tariffs to such a low level, combined with

a series of economic recessions in the 1970s and early 1980s, 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.

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. For a

start, world trade had become far more complex and important than 40

years before: the globalization of the world economy was underway,

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trade in services – not covered by GATT rules – was of major interest

to more and more countries, and international investment had

expanded.

The expansion of services trade was also closely tied to further

increases in world merchandise trade. In other respects, GATT had

been found wanting. For instance, in agriculture, loopholes in the

multilateral system were heavily exploited, and efforts at liberalizing

agricultural trade met with little success. In the textiles and clothing

sector, an exception to GATT’s normal disciplines was negotiated in

the1960s and early 1970s, leading to the Multifibre Arrangement. Even

GATT’s institutional structure and its dispute settlement system were

causing concern.

These and other 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.

What happened to GATT?

The WTO replaced GATT as an international organization, but the

General Agreement still exists as the WTO’s umbrella treaty for trade

in goods, updated as a result of the Uruguay Round negotiations. Trade

lawyers distinguish between GATT 1994, the updated parts of GATT,

and GATT 1947, the original agreement which is still the heart of

GATT 1994.

TASKS

Task 1. Transcribe and pronounce:

Distinguish, merchandise, to reinforce, prosperous, overhaul,

commerce, auspices, incontestable, anchor, embark, credibility,

deteriorating, loophole, exploit.

Task 2. Find adjectives in the text for the following nouns and

translate these word combinations into Russian:





Overhaul

Trading system

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











Recessions

Agreement

Negotiations

Competition

Arrangements

Principles

Task 3. Fill in the right word from the word column:

rush

liberal

negotiations

provisional

to handle

anti-dumping

incontestable

unemployment

anchor

to embark

complex

lawyers

loopholes

effort

1. Trading system became more and more … through rounds of trade

negotiations.

2. It seemed well-established, but throughout those 47 years, it was a

… agreement and organization.

3. The original intention was to create a third institution … the trade

side of international economic cooperation.

4. Much of this was achieved through a series of multilateral … known

as “trade rounds”

5. The Kennedy Round in the mid-sixties brought about a GATT …

Agreement and a section on development.

6. GATT was provisional with a limited field of action, but its success

over 47 years in promoting and securing the liberalization of much

of world trade is ... .

7. The … of new members during the Uruguay Round demonstrated

that the multilateral trading system was recognized as an … for

development and an instrument of economic and trade reform.

8. High rates of … and constant factory closures led governments in

Western Europe and North America to seek bilateral market-sharing

arrangements with competitors and … on a subsidies race to

maintain their holds on agricultural trade.

9. For a start, world trade had become far more … and important than

40 years before.

10. For instance, in agriculture, … in the multilateral system were

heavily exploited, and efforts at liberalizing agricultural trade met

with little success.

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11. These and other factors convinced GATT members that a new … to

reinforce and extend the multilateral system should be attempted.

12. Trade ... distinguish between GATT 1994, the updated parts of

GATT, and GATT 1947, the original agreement which is still the

heart of GATT 1994.

Task 4. Find the English equivalents for the following words:

1. укреплять, усиливать;

2. лазейка, увертка;

3. пользоваться, использовать, эксплуатировать;

4. интерес,

участие,

заинтересованное отношение,

забота,

беспокойство;

5. процветающий, преуспевающий;

6. тщательный осмотр, изучение; пересмотр, ревизия;

7. председательствовать, осуществлять контроль, руководство;

8. управлять, заведовать; контролировать; командовать;

9. многосторонний;

10. прыжок, скачок, помеха, преграда, препятствие;

11. доброе предзнаменование,

протекция,

содействие,

покровительство, заступничество;

12. вступать в спор, дискуссию (с кем-л.), пытаться найти

решение;

13. неопровержимый, неоспоримый, непреложный, бесспорный;

14. время, период, эпоха;

15. получать результат;

16. якорь спасения, символ надежды;

17. регресс, спад; снижение, падение;

18. разрабатывать, продумывать (планы, идеи); выдумывать,

изобретать;

19. начинать; вступать (в дело, в войну);

20. значимый; существенный; важный;

21. глобализация;

22. распадаться, разрушаться.

Task 5. Prepare a monologue on GATT. Pass your judgment on its

activities.

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