General Agreement on Tariffs and Trade Essay ⋆ Environment Essay Examples ⋆ EssayEmpire

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The general agreement on Tariffs and Trade (GATT) is a multinational agreement on rules designed to foster international trade. The GATT was established in 1947, and by the 1990s, had over 100 signatory nations. The agreement has been revised periodically since its inception through negotiations referred to as rounds, of which there have been seven. For most of its history, the focus of those negotiations was on the reduction of tariffs, taxes imposed on imported good. Although the GATT was a relatively weak entity where disagreements between nations were primarily settled through negotiation, the agreement did facilitate a decrease in average tariffs internationally from 40 percent to roughly 5 percent of the price of imported goods.

During the 1980s, the United States, the world’s largest and most powerful economy, sought to use the GATT to open more markets to U.S. goods in order to reduce its growing trade deficit and to aid U.S.-based firms conducting business internationally. During the so-called Uruguay Round of negotiations, which lasted from 1986-93, the GATT expanded beyond its traditional focus on external tariffs on manufactured goods to include provisions on agricultural products, services, deregulation, and the protection of intellectual property rights. A significantly more powerful successor organization, the World Trade Organization (WTO), was also established during this round in order to enforce trade agreements.

While the United States was successful in adding many new provisions to the agreement, some measures met with stiff resistance from social movement organizations throughout the world. An international movement composed of environmentalists, farmers, consumers, and labor organizations has since mobilized in favor of “fair trade” in contrast to the “free trade” arrangements enshrined in the GATT/WTO. They argue that large multinational corporations reap most of the benefits from free trade agreements such as GATT, while workers and the poor suffer and domestic sovereignty is undermined.

Resistance to the free trade measures has come from several sectors. Small farmers around the world, but especially in Europe, opposed the elimination of agricultural subsidies called for in the Uruguay negotiations. Although the United States had originally supported the exclusion of agricultural goods from the GATT, costly agricultural subsidies were contributing to the U.S. budget deficit and Reagan Administration officials sought to reduce this public expense. It was also believed that larger U.S. farms would have a comparative advantage over smaller European farms in the international agriculture market, but corresponding European agriculture subsidies prevented unfettered competition. In the Uruguay Round, the United States secured the reduction, but not the elimination of farm subsidies, largely due to resistance from farmers in Europe and, to some extent, domestically.

Environmentalists, consumer groups, and some labor organizations also opposed measures included in the GATT negotiations. Free trade advocates sought to eliminate what they considered nontariff trade barriers, nontariff measures that in some way can serve to restrict imports or to favor domestic production. This includes laws such as those that require that products be produced with a given percentage of domestic content or policies that aid a certain industry, thus giving them an advantage over foreign producers. Some environmental regulations and health and safety measures could also be interpreted as nontariff trade barriers under GATT rules. Since an anonymous panel of free trade experts would be empowered to offer a binding ruling on challenges to such laws, critics of the trade agreement see this kind of measure as an infringement on domestic sovereignty and democratic control. In one case in 1991, the government of Mexico used GATT provisions to challenge the United States for restricting the importation of tuna caught using a technique that also caught and killed dolphins, a practice that was banned under the U.S. Marine Mammal Protection Act. The GATT panel that heard the case sided with Mexico. Free trade critics charge that import restrictions on the basis of abusive labor practices or safety concerns could also be challenged, thus threatening to undermine all manner of regulatory controls and policies. European restrictions on beef produced from hormone treated cattle and forest protection measures that ban the export of raw logs are other examples cited by critics fearful that free trade authorities could undermine domestic law.

Intellectual property rights measures included in trade agreements have also spurred controversy. The United States, a leader in the development of technology, sought greater protection for patented techniques and products, which are commonly pirated, especially in less-developed nations. Agricultural technology has been the subject of greatest conflict as corporations in the wealthy nations are patenting products derived from genetic material extracted from less-developed nations. Poor farmers in lessdeveloped nations have protested the requirement that they pay royalties for the use of seeds made with genetic material taken, without compensation, from their own countries.

Bibliography:

Jeremy Brecher and Tim Costello, Global Village or Global Pillage, 2nd ed. (South End Press, 1998);
David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations (Stanford University Press, 1999);
Robert Schaeffer, Understanding Globalization (Rowman and Littlefield, 1997).