Record Detail Back
International Economics: Theory and Policy
- Share to:
The growth of international trade and investment has been stimulated partly by the steady
decline of trade barriers since the Great Depression of the 1930s. In the post–World War II era,
the General Agreement on Tariffs and Trade, or GATT, prompted regular negotiations among a
growing body of members to reciprocally reduce tariffs (import taxes) on imported goods. During
each of these regular negotiations (eight of these rounds were completed between 1948 and 1994),
countries promised to reduce their tariffs on imports in exchange for concessions—that means tariffs
reductions—by other GATT members. When the Uruguay Round, the most recently completed round,
was finalized in 1994, the member countries succeeded in extending the agreement to include
liberalization promises in a much larger sphere of influence. Now countries not only would lower
tariffs on goods trade but also would begin to liberalize the agriculture and services markets. They
would eliminate the many quota systems—like the multifiber agreement in clothing—that had
sprouted up in previous decades. And they would agree to adhere to certain minimum standards to
protect intellectual property rights such as patents, trademarks, and copyrights.
The World Trade Organization (WTO) was created to manage this system of new agreements, to
provide a forum for regular discussion of trade matters, and to implement a well-defined process for
settling trade disputes that might arise among countries