GATT- general agreement on tariff

and trade
The international conference of 1944 which recommended the
establishment of IMF(International Monetary Fund) and
World Bank and also recommended the establishment of
ITO(International Trade Organisation) but did not
materialize, but in the year 1948 GATT was established.
International trading system, since 1948 was at least in
principles, guided by the rules and procedures agreed to the
signatories to the GATT which was an agreement sign by
the member nations, which where admitted on the basis of
there willingness to accept the GATT disciplines.
The primary objectives of GATT was to expand international
trade by liberalizing so as to bring about all round economic
prosperity, the important objective are as follows as:-
1) Raising standards of living.
2) Ensuring full employment and large and steady growing
volume of real income and effective demand.
3) Developing full use of resources of the world.
4) Expansion of production and international trade.
GATT has certain conventions and general principles governing
international trade among countries that follows the GATT
agreement:-
1) Any proposed change in the tariff or any type of commercial
policy of a member country should not be undertaken without
the consultation with the other parties to the agreement.
2) The countries that adhear to get work towards the reduction of
tariff and other barriers to the international trade should be
negotiated within the frame work of GATT.
BARRIERS
a) TARIFF b) NON TARIFF
(Change in monetary value) (Quality &
Quantity of product and
services)
 # For the realisation of the objective GATT adopted the following:-

1) NON DISCRIMINATION- The principle of non-discrimination requires

that no member country shall discriminate between in the conduct of
international trade, to ensure non-discrimination the members of GATT to
apply the principle of MFN(most favoured nation) status to all import and
export duties. The GATT also permit to member to adopt step to counter
dumping and export subsidies.

2) PROHIBITION OF QUANTITATIVE RESTRICTIONS- GATT seek

to prohibit quantitative restrictions as far as possible and limit restrictions
on trade to the less rigid tariffs, however certain exceptions to this
prohibition are granted to countries, confronted with balance of payment
difficulties and to the developing countries.

3) CONSULTATION- By providing a forum for continuing consultation,

GATT has provided to resolve disagreements through consultation.
 Evaluation of GATT
1> When GATT was signed in the year 1947 only 23 nations
were party to it. In the 1986, there were 117 were members.
One of the principle achievement of GATT was the
establishment of forum for continuing consultation.
2> GATT achieved considerable liberalization, few exception
are as follow as:-
# Agricultural trade was an exception to the liberalizations.
Trade in agricultural became progressively more distorted
by the support given to the farmers in agricultural sectors.
# Another exception was textile: trade in textile was restricted
by MFA. under MFA import of textile items, to number of
developed countries was restricted by quota.
# Developing countries with balance of payment
problem have been generally exempted from
liberalization.
3> The average level of tariff on manufactured
products in industrial countries was brought down
from 40% in 1947 to 3% in 1986.
4> The export of developing countries gained
significantly less from the GATT agreement then did
the export of developed countries
 1986- Uruguay round
agreement of MTN
This was 8th round of multilateral trade organization
which was held in September 1986. The first 6 round of
MTN(Multi Lateral Trade Negotiation) concentrated almost
exclusively on reducing tariffs while the 7 th round which was
the Tokyo round (1973-79). Moved on to tackle the non tariff
barriers. The Uruguay round agreement broaden the scope of
MTN by including new areas.
1) General Agreement on Trade In Services (GATS).
2) Trade Related Aspects Of Intellectual Property and
services. (TRIPS)
3) Trade Related Investment Measures (TRIMS)
Difference between GATT & WTO

GATT
1) GATT was adhoc and
provisional.
WTO
2) GATT has contracting parties. 1) WTO is permanent.

3) GATT system allows existing 2) WTO has members.

domestic, legislation to
continue even if it violated 3) WTO does not permit this.
GATT agreement.

4) GATT was less powerful and

4) WTO is more powerful and dispute
dispute settlement
settlement mechanism was more
mechanism was less
efficient.
efficient.
 WTO (WORLD TRADE
ORGANISATION)
Following the uruguay round agreement GATT was converted from a provisional
agreement into a formal international organisation called World Trade Organisation
with effects from 1st jan 1995, under the old system there were two GATTS:-
1) GATT as an organisation.
2) GATT as an agreement.
Under the new system, GATT the organisation seized to exist with the
establishment WTO where as GATT the agreement continued to exist in amended form.

* FUNCTIONS OF WTO:-

1) WTO shall facilitate the implementation, administration and operation of MTA (Multi-
lateral trade agreement ).
2) It shall provide the forum for negotiation among its members concerning there multi-
lateral trade relationship.
 cont.
3) It shall administered the understanding of rules and procedures governing the
settlement of disputes.
4) WTO shall administered the trade review mechanism.
5) With a view to achieve great coherence in global economic policy making, the WTO
shall co-operate with IMF and IBRD (International Bank For Reconstruction and
Development).

* IMPORTANT FEATURES OF URUGUAY ROUND AGREEMENT

1) Liberalization of trade in manufactures:-
1) Liberalization of trade and manufactured is achieved mostly by reduction of
tariff and removing and steps non tariff barriers.
a) Tariff Barriers:-
# Expansion of tariff barriers.
# Reduction in tariff rates.
# Expansion of duty free access.
 cont
b) Non- Tariff Barriers:-
In the area of non-tariff barriers removal of VER (Voluntary Export
Restraint) and MFA (Multi- Fibre agreement) are considered as land mark achievement.
2) Liberalization of agricultural trade:-
One of the important feature of uruguay round agreement was the
inclusion of agricultural in MTN. The exclusion of agriculture from the previous round
and its effective exemptions from the GATT discipline made agriculture a highly
protected centre. In the developed countries the important aspects of uruguay round
agreement on agriculture include:-
# Tariffication .
# Tariff Binding.
# Tariff cuts.
# Reduction in Subsidies.
=) Prohibited subsidy.
=) Actionable Subsidy.
=) Non- Actionable Subsidy.
 GATS
The general agreement on trade and service which extends multi-lateral rules and
disciplines to services is regarded as the land mark achievement of uruguay round . The
GATS defines, services as the supply of service from:-
# The territory of one member into the territory of other member. (Transport)
# In the territory of one member, to the service consumer of any other member.(Franchisee)
# By a service supplier of one member through the commercial presence in the territory of
any other member. (Tourism)
# By a service supplier of one member through the presence of natural persons of a
member, in the territory of any other member. (Foreign Consultant)

Among the most important obligation, is a most favoured nation obligation that
essentially prevent countries from discriminating among foreign suppliers of services.
Another obligation is a transparency requirement according to which each
member country will publish all its relevant laws and regulations, pertaining to services.
 TRIMS

Trade related investment measures refers to certain conditions or

restrictions imposed by a government in respect of foreign investment of the
country. The agreement on TRIMS provide that no contracting party shall apply
any TRIM, which is in consistence with WTO, article.
Following TRIM are considered as in-consistence:-

1) Local content requirements.

2) Trade balancing requirement.

3) Foreign exchange balancing requirements.

4) Domestic sale requirements

 TRIPS

The uruguay round agreement on TRIPS (trade related

intellectual property) covers seven intellectual property:-
1) Copy Right.
2) Patents
=) Process.
=) Products.
3) Trade Marks.
4) Geographical Indicators.
5) Industrial Layouts
6) Integrated Circuits.
7) Undisclosed Information Including trade Secrets.
 Cont.
Intellectual property rights has been defined as
information with commercial value. They have been
characteristics as the composite of ideas, inventing and
creative expression plus public willingness to bestowe the
status of the property on them and give their owners to
exclude others from the use of protected subject matter.
Difference between Indian patent act
1970 & Uruguay round agreement
INDIAN PATENT ACT ROUND AGREEMENT
1) Only the process patent in the field of 1) Product patent is also food, drugs,
food, drugs, and chemical substances and chemical substances as well as
was allowed. all other products.
2) Patent expiry period was 5-7 yrs in case 2)Patent expiry period is 20 yrs.
of food, drugs, and chemical
substances and for other products, it
was 14 yrs.

3) Plants and animals including micro- 3) Only plants , animals and biological
organisms and biological processes for processes are not patentable. Micro-
the production of plant and animals. organism, non-biological process are
patentable.
4) Non specific system exist to protect the 4) Right of inventors of plant and seed
rights of inventors of plant and seed varieties to be protected through
varieties. special system.
 cont.
5) Process for treatment of human beings
and animals not patentable.

6) There is ceiling on the royalty or fee

that the patent holder can demand
from license.

5) Process or method for treatment on

human beings and animals are not
patentable.

6) There can be no ceiling on the fee

and royalty that can be charged from
a license by a patent holder.