Origin and Development of the WTO

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 The GATT 1947 and the International Trade Organization

1.       The USA in 1945 invited its allies to negotiate multilateral agreement on the reduction of tariffs in trade of goods.

2.       At the proposal of the United States, the United Nations Economic and Social Committee adopted a resolution calling for a conference to draft a charter for an ‘International Trade Organization’ (ITO).

3.       Preparatory committee met in London in 1946.

4.       The preparatory committee then met in Geneva from April – November 1947.

The Geneva meetings were focused on three things:

a.       preparation of a charter of the ITO.

b.      negotiation of a multilateral agreement to reduce tariffs reciprocally.

c.       drafting the ‘general clauses’ of obligations relating to the tariff obligations.

 

5.       The last two issues culminated into the General Agreement on Tariff and Trade (GATT). Negotiators however failed to agree on ITO.

 

6.       On 30 October 1947, eight of the twenty-three countries that had negotiated the GATT 1947 signed the ‘Protocol of Provisional Application of the General Agreement on Tariffs and Trade’ (PPA).

 

7.       Pursuant to this Protocol Contracting Parties undertook to apply provisionally:

a. Parts I and III of the General Agreement on Tariffs and Trade; and

b. Part II of that Agreement to the fullest extent not inconsistent with existing legislation.

 

The GATT 1947 was thus applied through the Pursuant to the PPA, Part I (containing the MFN obligation and the tariff concessions) and Part III (containing procedural provisions) would apply in full, while Part II (containing most PPA. of the substantive provisions, the application of which could require the modification of national legislation and thus the involvement of the legislature) only applied to the extent that it was not inconsistent with existing legislation.

 

8.       In March 1948, the negotiations on the ITO Charter were successfully completed in Havana. The Havana Charter provided for the establishment of the ITO. The ITO Charter, however, never entered into force.


 

GATT as a de facto multilateral organization

1.      In the absence of an international organization, GATT carried out functions that of an international organization.

2.      The legal basis was, article XXV of the GATT.

3.      GATT was successful in reducing tariffs on trade in goods.

 

Eight Rounds of negotiations

4.      In 1986, contracting parties started Uruguay Round with broad agenda. The Uruguay Round negotiations would cover trade in goods, including trade in agricultural products and trade in textiles and clothing, as well as trade in services.

 

5.      In April 1990, Canada formally proposed the establishment of what it called a ‘World Trade Organization’, a fully fledged international organization which was to administer the different legal instruments related to international trade, including the GATT, the GATS and other multilateral instruments which were being developed in the context of the ongoing negotiations. Along the same lines, the European Community submitted a proposal, in July 1990, calling for the establishment of a ‘Multilateral Trade Organization’. The European Community argued that the GATT needed a sound institutional framework ‘to ensure the effective implementation of the results of the Uruguay Round’.

 

6.      After being initially reluctant, the US agreed to the establishment of a new international trade organization. The United States suggested that the name of the new organization should be the ‘World Trade Organization’ as had originally been proposed by Canada.

 

7.      The Agreement Establishing the World Trade Organization was signed in Marrakesh in April 1994, and entered into force on 1 January 1995.

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