History of Trade Negotiations. GATT International Trade Organization (ITO) failed to be established. Post WWII trade negotiations took place under the.

History of Trade Negotiations

GATT

• International Trade Organization (ITO) failed to be established.

• Post WWII trade negotiations took place under the auspices of General Agreement on Tariffs and Trade (GATT), established on a provisional basis as a draft charter of ITO, on Tariffs and Trade).

Earlier Rounds

• Developing countries played only a small role in the first seven rounds of trade negotiations

• Article XVIII in GATT allows them to “implement programmes and policies of economic development designed to raise the general standard of living of their people, to take protective or other measures affecting imports.”

• Developed countries were far more interested in each others’ market than in those of developing countries

Kennedy Round (63-67)

• The initial creation of the European Common Market in the late 1050s was one of the key motivations for the American initiative to launch the Kennedy Round in the early 1960s.

• The US wanted to reduce the newly created discrimination against American exports, and also to build the “new Atlantic partnership” enunciated by President Kennedy.

Tokyo Round (1973-79)

• The extension of its discrimination in important new markets, was an important factor in the American decision to insist on the Tokyo Round in the 1970s.

• As a result, the word trade system was tailored to the interests of the developed countries.

• Protection was progressively reduced on the goods of export interest to developed countries, but remained on goods exported intensively by developing countries.

Outcome

• The GATT came to cover trade in all goods except agriculture and textiles.

• Textiles were covered by the Multifiber Arrangement (MFA), through which developing countries had quotas on the amount of textiles they could export to developed countries.

• Developed countries didn’t impose any restrictions on textile imports from other developed countries.

Unfair trade

• “When they [the developed countries] do not discriminate against those countries [the developing countries] in the form proscribed by the most-favored-nation principle,… their policies are in effect discriminatory in that the most serious barriers are erected in goods which the less developed countries typically have a comparative advantage in producing—agricultural commodities in raw or processed form, and labor-intensive, technologically unsophisticated consumer goods” (Johnson 1967)

Uruguay Round (86-94)

• The round started in 1986 and ended in 1993.– Expanding service trade– trade-related aspects of intellectual property

rights (TRIPs)– trade-related investment measures (TRIMs).– Dispute settlement scheme– To form WTO

Outcome

• Many of the new obligations imposed significant burdens on developing countries.

• “the developing countries took bound commitments to implement in exchange for unbound commitments of assistance”

• It is estimated that the vast majority of the gains from the Uruguary Round accrue to developed countries, with most of the rest going to a relatively few large export-oriented developing countries.

• Some estimates report that the 48 least developed countries are actually losing a total of US$600M a year as a result of the Uruguay Round.

Outcome

• After the implementation of Uruguay Round commitments, the average OECD tariff on imports from developing countries is four times higher than on imports originating in the OECD.

Doha Round

• Seattle Round: started and ended on November 30, 1999.

• Doha Round: started in Nov 2001– The developed countries promised to make

the talks a “development round”; to redress the imbalances of previous rounds.

– Cancun, 2003– Hong Kong, 2005– Basically dead