Briefly discuss Fibertech’s financial statements.
What Is the General Agreement on Tariffs and Trade (GATT)?
The General Agreement on Tariffs and Trade (GATT), signed on Oct. 30, 1947, by 23 countries, was a legal agreement minimizing barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies while preserving significant regulations. The GATT was intended to boost economic recovery after World War II through reconstructing and liberalizing global trade.
The GATT went into effect on Jan. 1, 1948. Since that beginning it has been refined, eventually leading to the creation of the World Trade Organization (WTO) on January 1, 1995, which absorbed and extended it. By this time 125 nations were signatories to its agreements, which covered about 90% of global trade.
The Council for Trade in Goods (Goods Council) is responsible for the GATT and consists of representatives from all WTO member countries. As of September 2019, the council chair is Uruguyan Ambassador José Luís Cancela Gómez. The council has 10 committees that address subjects including market access, agriculture, subsidies, and anti-dumping measures.
One of the key achievements of the GATT was that of trade without discrimination. Every signatory member of the GATT was to be treated as equal to any other. This is known as the most-favored-nation principle, and it has been carried through into the WTO. A practical outcome of this was that once a country had negotiated a tariff cut with some other countries (usually its most important trading partners), this same cut would automatically apply to all GATT signatories. Escape clauses did exist, whereby countries could negotiate exceptions if their domestic producers would be particularly harmed by tariff cuts.
Most nations adopted the most-favored-nation principle in setting tariffs, which largely replaced quotas. Tariffs (preferable to quotas but still a trade barrier) were in turn cut steadily in rounds of successive negotiations.
The overriding objective of the WTO is to help international trade flow as freely as possible while also making it predictable. To achieve this objective, it carries out several functions which serve to reach the ultimate objective of providing common institutional framework for the conduct of trade relations among its member countries.
Function 1
WTO is a system based on rules. Its trade rules consist of approximately 60 agreements covering different areas of trade in goods, customs, agriculture, quality infrastructure, services, intellectual property rights etc. Having rules without implementation would not help. Thus, implementation of these multilaterally agreed rules is vital to assure the proper functioning of the system. With this in mind, WTO facilitates the implementation, administration, and operation of the multilateral trade agreements while furthering the objectives of such agreements. The WTO also provides the framework for the implementation, administration and operation of the plurilateral agreements to which only a handful of WTO members are parties. Read more
Function 2
WTO was established as a result of negotiations and everything it does is the result of negotiations.
As a member driven organization, it is the members who decide for the WTO on different questions through negotiations. WTO provides for a forum where Members go and try to solve the trade problems they encounter with one another. These problems can be related to issues covered by already existing agreements or issues not addressed yet in the WTO.
Although it covers a great deal of trade-related matters, there are issues that agreement could not be achieved at the time of WTO’s establishment or new issues that came up since the establishment. Thus, it is logical that WTO also provides for further negotiations with a view to expanding the multilateral trading system and adapting it to the new realities. Read more
Function 3
Imagine a system based on rules without an appropriate enforcement mechanism. Would such a system be effective and respected by the members? The answer is most probably, not. Therefore, the dispute settlement mechanism is an essential part of the WTO as it ensures that the trade rules are respected and it guarantees the security and predictability to the multilateral trading system. The achievements of the WTO dispute settlement mechanism have been celebrated for years by the members making it the “crown jewel” of the organization. Needless to say, that it is one of the most active and highly effective state-to-state dispute settlement mechanisms in the world. Read more
Function 4
Taking commitments in the multilateral level is not the end of story, of course. Members have to follow their multilateral commitments at home.
The WTO monitors the domestic policies and regulations of the members to make sure that they are in compliance with WTO requirements. The Trade Policy Review Mechanism ("TPRM") exists for this purpose. The function of the TPRM is to examine the impact of a country’s trade policies and practices on the multilateral system. The review tries to increase the transparency of Members’ trade policies and practices and to improve the quality of public and interstate debate on the trade-related issues. Around 24 countries are reviewed each year. Read more
Function 5
Not all WTO members are in the same level of development. The organization has highly developed, developing and least-developed country members. Apart from special and differential provisions offering more convenient rules for developing countries and LDCs, WTO also developed several tools, both on its own and in cooperation with other organizations, to support developing and least-developed country members in participating more fully in the global trading system. These include different technical assistance and training programs offering human, institutional and infrastructural capacity building to members which are in need of this. The assistance helps developing and least-developed country members to benefit from trade more and achieve economic growth and poverty reduction through trade. Read more
Function 6
The WTO does not exist in isolation from the international community. It cooperates with international organizations and non-governmental organizations when conducting its activities. To assure coherent and mutually supportive policies in global economic sphere, WTO cooperates with the International Monetary Fund and World Bank. In the quality infrastructure, food safety, sanitary and phytosanitary area, the WTO cooperates with several standard-setting international organizations. It is also worth mentioning WTO’s cooperation with the United Nations on the achievement of Millennium Development Goals through trade.
