In the GATT began to work toward curbing predatory pricing policies. These policies are known as dumping. As the years have passed, the countries have continued to attack global issues, including addressing agriculture disputes and working to protect intellectual property.
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But GATT was not a treaty. With this clause, the United States could spur trade liberalization or contravene the rules of GATT when politically or economically necessary US Tariff Commission, , , 20 note 4. During this period, GATT sponsored eight trade rounds where member nations, called contracting parties, agreed to mutually reduce trade barriers. Important industries in the United States such as textiles, television, steel and footwear suffered from foreign competition and some workers lost jobs.
However, most Americans benefited from this growth in world trade; as consumers they got a cheaper and more diverse supply of goods, as producers, most found new markets and growing employment. From to about this economic growth came at little cost to the American economy as a whole or to American democracy Aaronson, , By the late s, a growing number of nations decided that GATT could better serve global trade expansion if it became a formal international organization.
In , the US Congress, in the Omnibus Trade and Competitiveness Act, explicitly called for more effective dispute settlement mechanisms. They pressed for negotiations to formalize GATT and to make it a more powerful and comprehensive organization. The WTO provides a permanent arena for member governments to address international trade issues and it oversees the implementation of the trade agreements negotiated in the Uruguay Round of trade talks.
It covers a much broader purview, including subsidies, intellectual property, food safety and other policies that were once solely the subject of national governments. The WTO also has strong dispute settlement mechanisms. As under GATT, panels weigh trade disputes, but these panels have to adhere to a strict time schedule. Moreover, in contrast with GATT procedure, no country can veto or delay panel decisions.
If US laws protecting the environment such as laws requiring gas mileage standards were found to be de facto trade impediments, the US must take action. It can either change its law, do nothing and face retaliation, or compensate the other party for lost trade if it keeps such a law Jackson, Despite its broader scope and powers, the WTO has had a mixed record. Nations have clamored to join this new organization and receive the benefits of expanded trade and formalized multinational rules.
Today the WTO has grown members. But since the WTO was created, its members have not been able to agree on the scope of a new round of trade talks. Many developing countries believe that their industrialized trading partners have not fully granted them the benefits promised under the Uruguay Round of GATT.
Some countries regret including intellectual property protections under the aegis of the WTO. A wide range of citizens has become concerned about the effect of trade rules upon the achievement of other important policy goals.
They offer a package approach to trade negotiations that can sometimes be more fruitful than negotiations on a single issue. The size of the package can mean more benefits because participants can seek and secure advantages across a wide range of issues.
Agreement can be easier to reach, through trade-offs — somewhere in the package there should be something for everyone.
This has political as well as economic implications. A government may want to make a concession, perhaps in one sector, because of the economic benefits. But politically, it could find the concession difficult to defend. A package would contain politically and economically attractive benefits in other sectors that could be used as compensation. So, reform in politically-sensitive sectors of world trade can be more feasible as part of a global package — a good example is the agreement to reform agricultural trade in the Uruguay Round.
Developing countries and other less powerful participants have a greater chance of influencing the multilateral system in a trade round than in bilateral relationships with major trading nations. But the size of a trade round can be both a strength and a weakness. From time to time, the question is asked: wouldn't it be simpler to concentrate negotiations on a single sector? Recent history is inconclusive. At some stages, the Uruguay Round seemed so cumbersome that it seemed impossible that all participants could agree on every subject.
Then the round did end successfully in This was followed by two years of failure to reach agreement in the single-sector talks on maritime transport. Did this mean that trade rounds were the only route to success? In , single-sector talks were concluded successfully in basic telecommunications, information technology equipment and financial services. The debate continues. Whatever the answer, the reasons are not straightforward.
GATT, the international agency, no longer exists. It has now been replaced by the World Trade Organization. GATT was ad hoc and provisional. The General Agreement was never ratified in members' parliaments, and it contained no provisions for the creation of an organization.
The WTO and its agreements are permanent. As an international organization, the WTO has a sound legal basis because members have ratified the WTO agreements, and the agreements themselves describe how the WTO is to function. The WTO has "members".
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