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Global Trade Evolution: Impact of the Uruguay Round and WTO

Explore the profound impact of the Uruguay Round and the World Trade Organization on the global trading regime, addressing key discussion points, challenges, and achievements in ushering in a new era of international trade. The narrative delves into the pressures faced by the General Agreement on Tariffs and Trade (GATT), evolution of trade policies, negotiations, and the establishment of the WTO. It also highlights the dynamic shift in power relationships among major economic players and persistent trade challenges post the Uruguay Round agreement.

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Global Trade Evolution: Impact of the Uruguay Round and WTO

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  1. Globalization Ch 3: pg 96-105 A discussion on the Uruguay Round, the WTO and their impact on an increasingly globalized trading regime

  2. Uruguay Round • Pressure on GATT increased due to increased globalization • New dialogue attempts • Bilateral, the Quad • All restate commitment to open trade

  3. Goals of the Uruguay Round • Review codes on NTBs set in Tokyo (1973-79) • Action on GATT dispute settlement procedures • Continuation of negotiations on a safeguards code • Tie agriculture into the GATT system • Consider new codes for high technology sectors and for service industries

  4. Uruguay Round • GATT was widely seen as a system on the verge of collapse • Sept 1986: special session of GATT (Uruguay Round) met • Established four broad categories of negotiating groups to focus on: • Issues discussed in earlier rounds that needed broad acquiescence • Concerns of developing countries • Mandates to reform existing GATT rules/mechanisms • Broaden the scope of GATT into nontraditional areas

  5. Responses to Uruguay Round • Developing Nations • Wanted to focus on unfinished business from the Tokyo Round • Industrialized nations in general • Wanted to modernize GATT by broadening its scope to deal with new areas of trade • EU and Japan • Concerned about the issue of sovereignty • Agreement proved difficult in Uruguay

  6. Uruguay Rd. by 1993 Close to Failing • Main conflict was between rich and poor nations… esp. on agriculture • US proposal: eliminate all direct farm subsidies • Cairns grp agreed; Japan opposed; EU saw its value, but was internally divided on it • Role of Pres. Clinton: speed it up! (1993) • Dec 1-15: important progress made in agri. subsidies, A/V svcs, & financial svcs • Uruguay was then declared “successful” • The agreement was signed in Marrakesh on 1 Apr. 1994; enforced on 1 Jan. 1995

  7. The Agreement at Marrakesh • 400 pg doc + another 22,000 pgs of detailed tariff schedules • Eliminated or reduced • Tariffs (further cuts) • Agri subsidies (reduced) • Textile and clothing quotas (elim. over 10 yrs) • New rules on • Services, intellectual property, trade-related services • New, binding procedures to settle trade disputes • Established the World Trade Organization (based in Geneva, replaced GATT)

  8. Accomplishments of the Marrakesh Agreement (Uruguay Round) • Extended the world trade regime in agriculture in a significant way for the first time • Many agri. Barriers remained, but it improved market access for many agri. products • Eliminated agri. Quotas and allowed them to be replaced by tariffs • Process of rules development (which began in Tokyo) was expanded • Esp. important was the Agreement on Safeguards • Modernized the int’l trading system with new rules for certain issues: • Services (GATs), intellectual property (TRIPs), foreign direct investment (TRIMs)

  9. Background to New Trade Challenges • The WTO and subsequent U.R. agreements became the foundation for further globalization of world trade • Liberalized markets + new info and computing technology = easier and cheaper flow of $, people, and ideas • LDCs, china and Taiwan and former Communist nations joined WTO by 2001

  10. New Trade Challenges • Certain issues remained unresolved: • Agriculture remained highly protected and barriers to trade was particularly tough on LDCs • safeguards and dumping wasn’t fully addressed by U.R. • National policies were affected regarding competition… • traditional barriers fell but new ones emerged via dominant local competitors who followed practices that restrained trade • Environmental dumping became a new concern • Tuna-dolphin case. Mexico vs. U.S. Mexico won. • The functioning of the WTO (as an IGO) • NGOs wanted a voice and access to decision-making • WTO accused of lacking transparency

  11. Shifting Power Relationships • Changes • Resurgence of the US as an economic power • Restructured economy; more flexible; strong macroecon. health; strong avg annual growth rate • Led the way in information and communication technologies • Yet, increasingly unable to lead the trading system • Economic weakness of Japan • Experiencing stagflation in the early 1990s • Trade was still important, but the value of the yen was volatile and was engaged in strong competition from other SE Asian nations • Europe continued to expand it membership • But was also trying to be more internally integrated • Euro was created, ties with Mediterranean region and E. Europe were strengthened • “New vitality and sense of direction that was lost in the 1980s”

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