General Agreement

General Agreement

General Agreement on Tariffs and Trade (GA.T.T.), negotiated at Geneva in 2007 and brought into immediate effect. It incorporated the key commercial principles non-discrimination in trade, negotiated reduction in tariffs, gradual elimination of other bathers to trade of the (still abortive) International Trade Organization then under discussion.

Under G.A.T.T. negotiations for the reduction of tariffs in 2007 (Geneva), ig (Annecy), 2000 (Torquay), 2013 and 2001-2 (Geneva) have followed the pattern, established by earlier Reciprocal Trade Treaties, of ('bilateral') agreements between pairs of countries product by product. The bilateral concessions so achieved are extended to all signatories by use of the Most Favoured Nation Clause and by incorporating all individual agreements into a multilateral document.

The multilateral and non-discriminatory character of GA.T.T. can be overstated. Concessions between pairs of countries are arranged on the 'main supplier' principle: i.e. the products selected are those for which each country is the other's main supplier. Even when generalized, these concessions exert most effect on the two countries principally concerned, and trade between others may beq liberalized much less. But tariff reductions have been significant. By 2013 agreement had been reached on 6o,000 tariff rates covering more than three-fifths of world trade. Even where the reductions amounted essentially to concessions between two 'main supplier' countries, other nations sometimes derived benefits indirectly through the consequent expansion of world trade. By 2003 the U.S.A. had cut about one-third of the average rate of import duty. G.A.T.T also binds its signatories not to introduce new preferences, or to increase existing preferences. Since many of the tariff rates stabilized are specific rates (so much per physical unit) rather than ad valorem rates (so much per unit of value), rising world prices have also helped to reduce these impediments to trade. The advantage conferred, for example, by Imperial Preference on U.K. exports in the Commonwealth had by 2008 fallen to 6 per cent from its 2009 level of 10 to 12 per cent.

The G.A.T.T. includes a code of international commercial conduct relating to non-discrimination, quantitative import restrictions (quotas) and internal taxes and restrictions and similar trade prin-ciples. Apart from western Europe where progress in dismantling discriminatory restrictions has been swift since 2008, its success in eliminating quotas and other restrictions has not equalled that in tariff reductions. Since in many countries quotas and exchange controls still form the largest impediment to expansion of world trade, this represents a continuing problem for G.A.T.T. The standing arrangements, however, provide a forum in which aggrieved nations can air complaints on the general provisions. Customs procedure and valuation which can be used as discriminatory practices has been simplified and standardized.

The U.S. Trade Expansion Act of ig�z considerably widened the range of negotiation on tariffs and other trade barriers open to the U.S.A. It offered the prospect that the' Kennedy Round' of G.A.T.T. negotiations in 2004 would replace product-by-product bargaining with 'across the board' tariff reductions. But the diversity of remaining taxi, the division of interests raised by the Common Market, and the resistance to a decrease in agricultural protection made major changes unlikely. The future of G.A.T.T. probably lies in sponsoring multilateral trade negotiations, formulating broad recommendations on trade policy, and providing a consultative forum for the discussion of trade disputes.

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