GATT WTO.ppt

GATT - WTO General Agreement on Tariffs and Trade Context: Pre-war depression “cured” by WWII - unlikely to be a regular economic policy option. Depression caused by protectionism. Depressions causes political instability. Political instability causes war Ergo: Need to end protectionism Harry S. Truman, US President General Agreement on Tariffs and Trade Thus - US leads campaign for postwar trade regime based upon: Classic (economic) liberal principle of comparative advantage. In effect: Tariffs would be lowered Each country to specialise in production of those goods it produced best (trading with other countries as appropriate). In theory all countries would be better off as a result. General Agreement on Tariffs and Trade 1947: Originally US vision for postwar trade regime to be encapsulated in creation of International Trade Organisation. Met domestic opposition. GATT - established as temporary agreement to provide basis for trade negotiation underway in Geneva. General Agreement on Tariffs and Trade In consequence US effectively dominated GATT. For example: The eight trade rounds that constituted GATT for example, were typically initiated by grants of negotiating authority from the US congress to the US President General Agreement on Tariffs and Trade GATT embodies 1st world rules/ assumptions for economic prosperity: Standardised production, Vast scale of production, Endless expansion of markets combine to create the engine for global economic growth General Agreement on Tariffs and Trade GATT based on four norms: Most-Favoured Nation Reciprocity Exemptions Development Norm General Agreement on Tariffs and Trade Most-Favoured Nation All members agree to extend unconditional MFN status to one another - no country receives preferential treatment not accorded to all other MFN countries. Any benefits acquired by one country are automatically extended to all MFN partners Only exceptions to this rule are customs unions (e.g. EU, NAFTA) General Agreement