Essay: The General Agreement on Tariffs and Trade (GATT)

Introduction:

The General Agreement on Tariffs and Trade (GATT) were begin
From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provide the rules for much of world trade and hold the position of authority over periods that saw in international commerece some of the highest growth rates. Throughout those 47 years it was a General agreement and organization that seemed well established.
Following the conclusion of World War second was created by treaty. To further regulate world trade Terrifs and Trade was implemented to aide in the economic recovery following the war.

Aims and objectives:

Through the reduction of tarrifs,quotas and subsidies GATTS reduce the barriers to international trade and it was its main objective.
‘ To expand International trade by liberating trade.
‘ Its Build an International trading system.
‘ It contribute to the prosperity of US to ensure orderly and equitable expansion of World trade.
‘ international trade Expansion
‘ increased standard of living
‘ Cuts costs by 50 ‘ 100% on important electronic items
‘ For agriculture trade it strengthen and clarify rules.
‘ To reduce subsided for agricultural production.
‘ full utilization of world resources
‘ Expansion of production and international trade.
‘ Better usage of resource of the world.
‘ These objectives and goals not only limit its contents but also decide on the directives to follow while its development.
‘ Therefore progressive trade and liberalization is the central objective of the general agreement. (Cobb, 1994).
Outcomes of the many rounds of the General Agreement on Tariffs and Trade
In which GATT system, albeit successful due to highly pragmatic leadership, which was imperfect, and so a series of rounds of laborious process of item-by-item tariff negotiations were held. In Between 1947 and 1995, and between participating countries there was eight rounds of negotiation. The rounds which were related to curtailing tarrif rates are the first six rounds , 7th round included the non-tariff obstacles.

Table: GATT Rounds

GENEVA
‘ April 1947
‘ Signing of GATT
‘ $10 billion of trade affecting 45000 tariff concessions.
ANNECY
‘ April 1949
‘ Around 5,000 counts of tariff reductions

TORQUAY
‘ September 1950
‘ Around 8,700 tariff concessions, cutting 1948 tariff levels by 25%
‘ GATT was established as a governing world body

GENEVA II
‘ January 1956
‘ $2.5 billion in tariff reductions
‘ Admission of Japan

DILLON
‘ September 1960
‘ $4.9 billion in tariff reduction
‘ Creation of the European Economic Community (EEC
KENNEDY
‘ May 1964
‘ Adoption of Part IV of the GATT’ absolution to developed countries from according reciprocily.
‘ Reduction of $40 billion in tariffs
‘ Adoption of an anti-dumping code

TOKYO
‘ September 1973
‘ Reduction of more than $300 billion in tariffs
‘ Control of the voluntary export restrictions and the proliferation of non tarrif barriers.

Formation of BRIC

BRICS is an association of five major emerging national economies countries which includes Brazil, Russia, India, China, and South Africa. The grouping was originally known as “BRIC” after the inclusion of South Africa in 2010 it is known as BRICS. The members belonging to BRICS are all developing or newly industrialised countries. but they are distinguished by their large, fast-growing economies.
Sohail Aslam 128
Sadeed ud Din 135

Analyses:

Even those countries which have good relations good and services cannot be flot freely among them.Numbers of reasons are there due to which countries implement trade barriers.contries implement trade barriers to protect their on companies from foreign competitiors.countries also implements to protect their consumers from dangerous or undesirable products. To avoid from complecated custom procedures countries also implements trade barriers. Although the trade barriers are in the benifts but the removal of unnecessary barriers will be in the favour of global economy.
BRICS are heterogenous group. By contributing in different sectors there contributing in global economy. Brazil is majorly contributing in agriculture sectors. Agriculture sector of brazil accounted for over 30% of total exports it provide 70% of employments and contributing 6% of GDP in 2010. The domestic econmy of brazil is dominated by sevice sector which provide 60% of emplyments and it contribute to the 2/3rd of the countries GDP. ??n comperison the industrial sector contribution to the GDP 27% and emplyed sector was 20%.
Russian economy is majorly driven energy sector. ??ndustry mining , manufacturingManufacturing industry of Russia which include mining energy production and construction contribute 80% of Russia export earning and nearly 60% of imports earning. Employed sector contributed 37% of the total GDP. Main contributor to GDP of Russia is service sector and having the share of 60%. However, its share of total exports was only 12% though that of imports was 27%. Agriculture has a relatively small share (less than 5%) of GDP and employs 10% of the workforce. Its share in total exports and imports is also marginal (about 5% and 13% respectively).
India is mainly contributing in agriculture sector and employing over half of the work force. Its contribution to GDP is declining and this sector only contributed19% of the GDP in 2010. Contribution of the service sector has been increasing because of the declining of agricultural sectors. It employs about a third of the workforce and contributes over 50% to the GDP. Trade in services accounts for over 34% of total exports and 20% of imports. The share of industry in GDP and employment is 26% and 14% respectively.
In china industrial sector is contributing half of the total GDP. Its manufacturing sector accounted for over 87% of total exports and nearly 80% of total imports. The services sector has also grown rapidly and contributed over 40% to the GDP and employed over 30% of the workforce. Services exports and imports, however, only accounted for around 10% of total trade. Agriculture sector of china is providing 40% of the employment which is continues main source of employment in china. But now a day the percentage of GDP of agriculture sector has been declining and stand only on 10%.Trade in agricultural goods is marginal as agriculture production caters mainly to the domestic market. In South Africa, the agriculture sector accounted for only 3% of GDP and employed 5% of the workforce in 2010. 10% of the export of South Africa is because of agriculture sectors. Service sector of south Africa contribute 2/3 of the GDP. The share of services in total exports and imports stood at around 18%. The industrial sector is dominated by mining industries and accounted for over 30% of GDP, 25% of the workforce, more than 70% of exports and 75% of imports in 2010.
Over the past decade the shares of BRICS has more than double in global trade. Because of this the shift in the trade policies can be attributed. Tariff rates have been decreased over the past few years in the BRICS economy and currently range from 8% to 12%. Russia has bound its tariff from the date of WTO memberships. As per domestics concerns both bound and apply rates has been kept higher for agriculture goods as compare to non agricultural goods. only the Brazil higher applied tariff on non agriculture goods.
A large number of import restrictions in the form of quotas and prohibitions have also been done besides cuts in tariff rates. For regulating imports in the BRICS licenses are imported. Rise in the technical barriers to trade and sanitary and phy to sanitary measures (SPS) occur applied by the BRICS. International standard setting organizations, are membered with all BRICS economies. including International Plant Protection Convention (IPPC).There are number of such arrangements amongst the BRICS themselves.
For example, INMETRO, the standardization body of Brazil has a memorandum of coperation with Russia and a understanding agreement with India on quality management systems. Similarly BIS, the standardization body of India has a memorandum of understanding with South Africa. Burgeoning trade volumes in the BRICS with an increase in the use of trade remedies economies has been accomplished.
Trade remedies include countervailing duties,safeguards and anti dumping measures. India has emerged as one of the most vital users of anti-dumping measures while China has remained the most frequent target of anti-dumping duties.
Besides merchandise trade, there has also been a significant rise in trade in services for the BRICS economies. Almost all the BRICS countries clocked double-digit growth in the import and export of services. Of the 12 services sectors covered under the WTO??s General Agreement on Trade in Services (GATS), specific commitments have been made by Brazil in 7, Russia in 11, India in 6, China in 9 and South Africa in 8 service sectors.

Ayesha Rizwan Roll # 110

Recommendations:

There are some factors that hampering the BRICS trade these are:
1. Poor infrastructure.
2. Higher duties on items of trade e.g. textiles and food products.
3. Poor trade facilitation regimes.
4. Less focus on trade in services.
5. Lack of bargaining capacity.
6. Lack of negotiation capacity.
7. Minimum focus on trade in services.
8. Unnecessary restrictions on imports and exports.
Some recommendations are there through which we can improve the measures of trade:
‘ We should have large focus on trade in services, as they have more advantageous in a sense that it is not affected by custom duties and poor infrastructural facilities. Even though service sector accounts for 60% or more of GDP in all BRICS countries except India.
‘ A large number of import restrictions in the form of prohbition and quotas should be removed.
‘ Higher duties on textile and food products should be removed as BRICS are heterogeneous group and they are contributing in different sectors.
‘ Trade facilitation regimes should be good.
‘ Trade can be more effective by reducing the foreign export subsidies, tariff and non-tariff barrier and internal supports.
‘ Enhance effective communication and dialogues among BRICS members for trade and investment.
‘ Enhance cooperation and coordination among BRICS members. This will lead them for good relations among them.
‘ As India and Brazil, contributing in agriculture sector so there is a need to reduce the subsided for the agriculture production.
‘ BRICS need to enhance the access to the markets for their potential export products and services. As actual and potential products and services are of great importance.
‘ There is a need to access the new technology to gain comparative advantage in new products and services.
‘ As bargaining is the complicated issue involving different factors and imports are the basic element in bargaining position of BRICS so BRICS need to enhance its bargaining capacity.
‘ BRICS need to enhance its negotiation capacity also for its products and services.

Aleesha Asif Roll # 101

Conclusion

The first thing which is on the preference while highlighting the achivements achived by the GATT that the system has become compatible that it may run its functions until WTO possess its recent subsitutions. The General Agreement on Tariffs and Trade (GATT) was multilateral agreement and was implemented to regulate world trade to aide in the economic recovery following the war. GATT provides for fair trade rules and the gradual reduction of tariffs, for goods, services and intellectual property, its purpose was the “substantial reduction of tariffs and other trade barriers, mutually beneficial basis and the deduction of preferences”. A large number of import restrictions in the form of quotas and prohibitions have also been done besides cuts in tariff rates. GATT’s main objective was to reduce the barriers of world trade through the reduction of tariffs and quotas. It was an image in the mnds of the people that for healthy world trade restrictions will be made for the relation of the taxes or tarrifs. The purpose of the GATT is to provide healthy life style ensuring employment opportunities, expanding exchange of goods consultations should be done to avoid disagreements from people for the development resources It should be used in accordance to ensure full employment in the participating nations to increase world population however it is surprising that “substantial” in this is not used for elimination of discrimination. Thus, the principle of most favoured nation indicates that each nation should be behaved as the most favoured nation.

International trade rules are not as easy as those governing domestic trade. The rules of international trade are far more difficult . This difficulty is due to protect its national economic space for the urgent need for each country 1929’s great economic criises of some countries lead to the care to again organize the postwar conditions like US britian. Now if we look at the back we will see that BRICS has doubled its shares.The share of services in total exports and imports stood at around 18%. A large number of import restrictions in the form of quotas and prohibitions have also been done besides cuts in tariff rates. As mentioned in this report, almost all the BRICS countries double-digit growth in the export and import of services.

The GATT had probably played a predominant role in the world trade.The GATT remained since the end of the Second World War as the only multilateral code governing international trade and for more than 40 years, different changes were occured in trade relations between the different countries of the world. It should be noted that one of the main objectives of the GATT is to promote development, and raise living standards in developing countries which is far from being achieved.

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