GATT & Multilateral Trading

Arrangements

The preamble of the GATT mentioned the

following objectives:

Raising the standards of living,

Ensuring full employment,
Development of the full use of the world resources, and
Expansion of production and international trade.

Principles of GATT

The workings of GATT are based on five underlying principles:

1.
2.
3.
4.
5.

Non discrimination
Reciprocity
Transparency
Dispute Settlement
Exceptions

Multilateral Trade Negotiations

First Round: It took place in Geneva, Switzerland in

1947, 23 nations exchanged tariff cuts on 45,000
products.
Second Round: The Second Round of multilateral trade
negotiation took place in Annecy, France in 1949, where
33 nations reduced tariffs on another 5,000 goods.
Third Round: The Third Round was held in Torquay,
Britain in 1950-51, where 38 nations reduced tariff on
8,700 items of goods.
Fourth Round: The Fourth Round was held in 1955-56 in
Geneva, where 26 nations participated, resulting in $ 2.5
billion worth of tariff reductions.
Fifth Round (Dillon Round): It was held in Geneva in
1960-61. Participants negotiated customs duties on 4,000
items. A new common external tariff of the European
Community was also proposed.

Multilateral Trade Negotiations (contd.)

Sixth Round (Kennedy Round): It was held in Geneva in

1964-67. More than 50 nations signed agreements on
grains and chemical products, and a code on antidumping duties was also established. Contracting parties
agreed to reduce tariffs by 50 per cent.
Seventh Round (Tokyo Round): This Round started in
1973 in Tokyo, and ended in 1979 in Geneva. 99 nations
reduced tariffs by 20-30 per cent. Contracting parties
negotiated an improved trading framework made up of
codes covering subsidies, technical barriers to trade,
public procurement, customs valuation rates etc.
Eighth Round (Uruguay Round): It began in September
1986 and concluded on December 15, 1993. Delegations
from 117 nations signed a GATT world trade treaty aimed
at opening up international markets and spurring global
economic growth into the 21st century.

The Kennedy Round

As a reaction to the Kennedy Round, the US Congress passed the Trade

Expansion Act in October 1962, which authorized the Kennedy
Administration to make a 50 per cent tariff reduction on all
commodities.
The way was paved for the opening of the Kennedy Round of trade
negotiations in Geneva in May 1964, and which were to be completed
by June 30, 1967.
More than 50 nations, accounting for 75 per cent of the world trade, cut
tariffs for industrial goods worth around $ 40 billion.
Average reduction ranged from 38 per cent in case of Britain to 30 per
cent in case of Japan, and 24 per cent in case of Canada.
These reductions left the US and the European tariff on manufactured
goods in the range of 5-15 per cent, and were limited to manufactured
goods by developed nations.
The negotiating parties had less success with agricultural products. They,
however, agreed on an average tariff reduction on agricultural products
by 25 per cent. Non-tariff barriers to trade remained untouched, and very
little attention was paid to the problems of the developing nations.

The Tokyo Round

The objectives of the Tokyo Round were laid down in the Tokyo declaration,
which set out far reaching programme for negotiators in six areas:

Tariff reduction,
Reduction/elimination of non-tariff barriers,
Coordinated reduction of all trade barriers in selected sectors,
Discussion on the multilateral safeguard system,
Trade liberalization in agriculture sector, and
Special treatment of topical products.
The following agreements on specific non-tariff measures on agriculture products
came into force from 1st January 1980:

The Agreement on Subsidies & Countervailing Duties

The Agreement on Customs Valuation
The Agreement on Government Procurement
The Agreement on Technical Barriers to Trade
The Agreement on Import Licensing Procedures
The Agreement on Dairy Products
The Agreement on Bovine Meat
The Agreement on Trade in Civil Aircraft

The Uruguay Round

The prominent agreements signed by the member nations in the
Uruguay Round were:

Agreement on Trade in Services

Trade Related Aspects of Intellectual Property Rights (TRIPs)
Trade Related Investment General Measures (TRIMs)
Agreement on Textiles and Clothing (ATC)
Agreement on Agriculture (AoA)
Agreement Establishing the World Trade Organization, by which

the GATT would be, renamed the World Trade Organization.

Agreements under the Uruguay Round

(Continued)
Sanitary and Phytosanitary
Measures

Technical Barriers to Trade

Anti-dumping Practices
Customs Valuation
Pre-shipment Inspection
Rules of Origin
Import Licensing Procedures
Subsidies and Countervailing Measures
Safeguards
Dispute Settlement
Trade Policy Review Mechanism
Plurilateral Trade Agreements
a)
b)
c)
d)

Public Procurement
Trade in Civil Aircraft
International Dairy Products
International Bovine Meat