© McGraw Hill Companies, Inc., 2000 The Legal Framework of International Trade

© McGraw Hill Companies, Inc., 2000 General Agreement on Tariffs and Trade  WWII allies want international organization in trade arena similar to UN in political arena.  GATT proposed by US in 1947 as step toward ITO.  1948: Havana Conference.  Failed charter for the International Trade Organization.  GATT  19 original members

© McGraw Hill Companies, Inc., 2000 GATT  Multilateral agreement: objective is to liberalize trade by eliminating tariffs, subsidies, import quotas, etc.  Used ‘rounds’ to gradually reduce trade barriers.  Generalized System of Preferences  MFN status  Products of LDCs are given duty free access to IDCs.

© McGraw Hill Companies, Inc., 2000  Most comprehensive trade agreement in history.  Created the World Trade Organization.  Impacted:  Agriculture subsidies (stumbling block: US/EU).  Applied GATT rules to services and intellectual property.  Strengthened GATT monitoring and enforcement. Uruguay Round

© McGraw Hill Companies, Inc., 2000 GATT Criticisms  Economic theories don’t fit the ‘real world’ model.  US global preeminence has declined.  Shift from cutting tariffs to eliminating non-tariff barriers angered countries.  ‘National Treatment’ or ‘Most Favored Nation’ status results in inequalities.

© McGraw Hill Companies, Inc., 2000 Impact of GATT  Currently, 151 members.  Represents 90% of world trade.  9 of 10 disputes satisfactorily settled.  Tariff reduction from 40% to 5%.  Trade volume of manufactured goods has increased 20 times.

© McGraw Hill Companies, Inc., 2000  Umbrella organization for:  GATT  Services  Intellectual property  Responsibility for trade arbitration:  Reports adopted unless specifically rejected.  After appeal, fail to comply can result in compensation to injured country or trade sanctions. World Trade Organization 154 Rue de Lausanne, Geneva

© McGraw Hill Companies, Inc., 2000 WTO -World Policeman?  104 disputes brought to WTO in first three years.  196 handled by GATT during its 50 year history.  US is biggest WTO user - 34 disputes.  Big wins - beef - bananas  Big loss - Kodak

© McGraw Hill Companies, Inc., 2000 WTO - Leading Victories  Telecommunications  68 countries (90%) of world telecommunications revenues  Pledged to open their markets to fair competition  Financial Services  95% of financial services market  102 countries will open, to varying degrees, their markets.