1. INTRODUCTION TO GATT  Modern regulation of international trade is traceable to WW 2 or more precisely to the perceptions of the Allied planners of the post-war World.  Architects of the post-war period saw the 19 th as a time of relatively open trade, peace.

2. Introduction  This contrasted with the first half of 20 th C – an era of high tariffs, discriminatory economic arrangements, import quotas, unilateralism and bilateralism, global depression.  There was a determination to end this – by creation of UN, trial of war criminals etc

3. Intro  multilateral organizations could serve both as a forum for negotiations (to avert war) and as a guardian of the rules.  Agreement on the creation of two such organizations –the IMF and WB – was reached as early as July 944 at Bretton woods, and ICAO was created in Chicago in December 1944.

4. Intro  The creation of a trade organization came later, though the agenda was in mind of the post-war planners from the outset.  Trade discussions between US and UK officials took place from 1943 on.  Though there were differences of position; the basic assumptions remained the same – international trade was to be encouraged, it was to be conducted primarily by private firms; and minimal govt interference.

5. Birth of GATT : By Accident  In Nov 1945, the US`issued a document entitled “ Proposals for Expansion of World Trade and Employment” for consideration by an International conference on trade and employment, purporting to represent the consensus of the US- UK talks.

6. Birth of GATT  The proposals called for a detailed charter or code of conduct relating to governmental restraints on international trade, and for creation of an international trade organization (ITO).  The proposed code affirmed the principle of unconditional MFN treatment and the prohibition of quotas.

7. Birth of GATT  Exceptions e.g. agriculture.  It also dealt with limitation of subsidies, conforming state trading to market conditions,prevention of cartels,limited resorts to commodity agreements and it contemplated exceptions for countries with BOP problems.  No mention of economic development

8. Birth of GATT The ITO was to administer the code, to provide a forum form the settlement of disputes, and to perform related functions such as the collection and dissemination of trade statistics and preparation of guidelines for customs valuation.

9. Birth of GATT  A few days after issuing the proposals looking to long term arrangements, the US invited 15 countries looking to an early conclusion of a multilateral trade agreement. All except USSR accepted.  Simultaneously, a proposal by the US for an international conference on trade and employment was adopted by the UN Economic Council.

10. Birth  A preparatory committee for the Conference used a draft charter suggested by the US; and after several drafts, the Draft Charter of the Ito was finalized and formed the basis of the Plenary Conference on trade and development convened by the Un in Havana in Nov 1947.

11. Birth  As these drafting and negotiations were going on, representatives of the countries that had been invited by the US plus 8 others invited subsequently were engaged in tariff cutting negotiations.  Typically, the negotiations were one-on-one sessions focusing on products for which one side was an important market and the other was the principal supplier.

12. Birth  Concessions on products were “paid for” by concessions in which the roles were reversed. A total of 123 such negotiations took place in 6 months (April-October 1947). Altogether more than 1000 meetings were held, considering some 50 000 items of trade.  Substantial reductions of tariffs were made, in other goods, low or duty free entry was agreed subject to binding obligations.

13. Birth  These negotiations had 3 consequences:  First, the pace and volume of negotiations would not have been achieved were it not possible to hold the negotiations at the same time. This style was to inform the subsequent MTN “Rounds” (eight 1947-99)

14. Birth  Second, all the concessions I.e. the negotiated reductions and bindings with respect to tariffs, were generalized to all the participants, in line with the MFN principle.  Third, concessions were recorded in a single document – the General Agreement on Tariffs and Trade (GATT), which contained not only schedules of tariffs bindings but also a code of conduct to safeguard the undertakings. And to commit participants to common trade behavior.

15. Birth  Since most of the countries involved in the negotiations were the same as those involved in the preparation of the ITO charter in the same city, the GATT reflected much of the commercial policy sections of the ITO Charter.  GATT was opened for signature on 30 October 1947 and entered into force – provisionally on 1 January 1948.

16. Birth  Meanwhile the Havana Conference on trade and Employment opened on 21 November 1947 with more than double the number of participants than those who had negotiated at Geneva; it had an agenda including employment, economic development, restrictive business practices, commodity agreement and a “commercial policy” and an elaborate structure for the ITO

17. Birth  After much acrimony; Havana Charter adopted for signature on March 24, 1948.  For some –too for free trade; for others, too for state intervention.  Ambivalence in ratification.  US refused to ratify; had other foreign policy priorities such as Marshall plan for reconstruction of Europe and Korean war.

18. Birth  ITO (Havana charter) lapsed.  The GATT, which was designed as a short-term- interim arrangement remained, until 1995.

19. Architecture  Defined by the need to avoid formal ratification.  First signatory states signed a “Prototol of Provisional Application” the idea being that the ITO charter would be a more binding, long-term commitment.  Similar to the creation of provisional ICAO  Second, only parts I and III were applicable but part III was to be applied if not inconsistent with national legislation.

20. Architecture  Part I – MFN principle (art 1) and binding of scheduled tariffs (art II).  Part III contained procedural provisions, customs unions, waivers etc.  Part II contained most of the substantive provisions of the Code of Conduct – antidumping and countervailing duties, customs valuation, quantitative restrictions etc.

21. THE NEGOTIATIONS  1947-8: Geneva Round of Multilateral Trade Negotiations (MTN), signing of GATT. 1948 GATT enters into force.  1949 Annecy Round  1951 Torquay Round  1956 Geneva (2)  1960-61 Dillon 21

22. MTNs  1964-67 Kennedy  1975-79: Tokyo  1986-94 :Uruguay