161
Following the original 1947 legal agreement between 23 countries, GATT was
revised seven times in “rounds” of international negotiations in 1949, 1951,
1955–1956, 1960–1962, 1962–1967, 1973–1979, and 1986–1994 (called the
“Uruguay Round”). Each round of GATT negotiations addressed a wide array of
issues, further reduced tariffs, and included more countries.
In 1995, GATT was subsumed within the World Trade Organization which
became, in practice, a club for the GATT signatories. As of 2019, the 164 member governments of the WTO represent 98% of world trade. The WTO facilitates
member fulfillment of pledges and conflict resolution, as well as ongoing negotiations (the “Doha Round” began in 2001 and is ongoing).
When the United Nations was established in 1945, the IMF and World Bank
became agencies of the UN. The World Trade Organization is not an agency
of the UN.
At the core of the GATT/WTO arrangement is that all members commit to treating imports from all other members equally. That is, every member must subject
every other member to the same trade conditions. This is referred to as “most
favored nation” treatment because every GATT/WTO member should be allowed to
trade under the same conditions as the most favorable conditions of any member.
Further, members should have access to other markets on a reciprocal basis. Finally,
members are required to be transparent about their trade restrictions.
Membership in the WTO does not preclude countries being involved in other
trade agreements such as the European Union and the North American Free Trade
Agreement (NAFTA) provided that they do not conflict with their GATT/WTO
commitments.
GATT and WTO have significant impacts on food, and more recently energy.
Each of these is addressed below.
6.2.3.1 Food
From the outset, agriculture has been treated differently to other products under the
GATT/WTO. Because food insecurity (see Sect. 3.2) has often been associated with
social instability, nations have long treated agriculture differently to other areas of
their economy. Nations have used tariffs, import quotas, and subsidies to achieve
stable food prices and to mitigate large swings in crop prices harmful to domestic
farmers. In addition, many countries have used the same tools to support rural economies impacted the movement of capital and people to industrialized urban centers—a social policy goal.
The importance of food and agricultural policies, especially in the USA, resulted
in major exceptions to the application of GATT to agricultural and fishery products.
In particular, the use of subsidies and import restrictions were allowed under GATT
in most circumstances. The effect of such exemption led to subsidized agriculture in
wealthier countries and frequently to large surpluses of certain crops. These surpluses were then exported with the help of export subsidies simultaneously providing
6 International Governance
Following the original 1947 legal agreement between 23 countries, GATT was
revised seven times in “rounds” of international negotiations in 1949, 1951,
1955–1956, 1960–1962, 1962–1967, 1973–1979, and 1986–1994 (called the
“Uruguay Round”). Each round of GATT negotiations addressed a wide array of
issues, further reduced tariffs, and included more countries.
In 1995, GATT was subsumed within the World Trade Organization which
became, in practice, a club for the GATT signatories. As of 2019, the 164 member governments of the WTO represent 98% of world trade. The WTO facilitates
member fulfillment of pledges and conflict resolution, as well as ongoing negotiations (the “Doha Round” began in 2001 and is ongoing).
When the United Nations was established in 1945, the IMF and World Bank
became agencies of the UN. The World Trade Organization is not an agency
of the UN.
At the core of the GATT/WTO arrangement is that all members commit to treating imports from all other members equally. That is, every member must subject
every other member to the same trade conditions. This is referred to as “most
favored nation” treatment because every GATT/WTO member should be allowed to
trade under the same conditions as the most favorable conditions of any member.
Further, members should have access to other markets on a reciprocal basis. Finally,
members are required to be transparent about their trade restrictions.
Membership in the WTO does not preclude countries being involved in other
trade agreements such as the European Union and the North American Free Trade
Agreement (NAFTA) provided that they do not conflict with their GATT/WTO
commitments.
GATT and WTO have significant impacts on food, and more recently energy.
Each of these is addressed below.
6.2.3.1 Food
From the outset, agriculture has been treated differently to other products under the
GATT/WTO. Because food insecurity (see Sect. 3.2) has often been associated with
social instability, nations have long treated agriculture differently to other areas of
their economy. Nations have used tariffs, import quotas, and subsidies to achieve
stable food prices and to mitigate large swings in crop prices harmful to domestic
farmers. In addition, many countries have used the same tools to support rural economies impacted the movement of capital and people to industrialized urban centers—a social policy goal.
The importance of food and agricultural policies, especially in the USA, resulted
in major exceptions to the application of GATT to agricultural and fishery products.
In particular, the use of subsidies and import restrictions were allowed under GATT
in most circumstances. The effect of such exemption led to subsidized agriculture in
wealthier countries and frequently to large surpluses of certain crops. These surpluses were then exported with the help of export subsidies simultaneously providing
6 International Governance