Uruguay Negotiations with GATT on Non-Tariff Barriers–Revealed!


January 31, 2019 admin 0 Comment

Uruguay Round, started with a number of problems inherited from the past, including the following:

1. Several countries had developed an increasing tendency to bypass GATT and impose new forms of non-tariff barriers (NTBs).

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2. GATT covered only trade in commodities. Trade in services was not covered.

3. Agriculture was also excluded from GATT, while the problems of trade in agricultural goods were worsening because of huge subsidies and other protectionist measures of the developed countries.

4. Dispute settlement mechanism of GATT was slow and cumbersome.

5. A number of regional trading blocs had come into existence and an increasing number of new ones were being formed.

Uruguay Round differed from the earlier ones in three ways:

1. Major focus of negotiations shifted from tariff cutting to reduction in non-tariff barriers.

2. The major area of negotiations was not trade in manufactures but trade/ transactions in non-manufacturing sectors—agriculture, services, intellectual property rights and investments.

3. Developing countries were expected to actively participate in negotiations, meaning that they were to give concessions in order to receive additional concessions, something which they had not done before.

Objectives:

The main objectives of negotiations were the following:

1. Checking proliferation of new protectionism and reversing this trend.

2. Bringing foreign investment, and trade in services and agriculture under negotiated agreements.

3. Negotiating international rules for the protection of trade-related intellectual property rights (TRIPs).

4. Negotiating international rules on trade-related investment measures (TRIPs).

5. Improving the dispute settlement mechanism.

Thus, the main objectives of the Uruguay Round included not only a solution of the outstanding problems, but also a solution of some new issues identified by the developed countries.

The developing countries were opposed to making the agenda heavier by inclusion of the new issues identified by developed countries. They were apprehensive that they would be put to a serious disadvantage on this account.

They feared that bindings and regulations relating to these issues would retard their economic growth, and impair their social and food security systems.

They were aware that the world economic order was already ‘unbalanced against them, and agreements on the extended agenda would make it further imbalanced and prevent them from acquiring sufficient competitiveness in export markets.

The developed countries, however, were insistent on inclusion of the newly identified issues in negotiations and argued that, in the long-run, even the developing countries would benefit.

Compared with the earlier round, Uruguay Round of GATT was very heavy and complex. It covered not only the traditional subjects like tariff and non-tariff measures and the improvement of GATT rules and discipline in subsidies, safeguards, etc., but also incorporated new areas not dealt with by GATT such as Trade Related Aspects of Intellectual Property Rights (TRIPs), Trade Related Investment Measures (TRIMs) and trade in services.

That way, the agenda of UR was overburdened from the beginning. In particular, the poor countries of the world were being pressed into accepting much more than they could bear.

In addition, they found that entire set of new agreements encroached upon their freedom to devise various economic and social security measures.

The new world economic order being created was inherently biased against poor countries while ideally speaking, it should have provided for additional means and opportunities for fostering their economic growth.

And on top of it, the developed countries took their own committed obligations non-seriously. In case of agricultural subsidies, for example, they were doing exactly the opposite of what they had committed.

It is claimed that the new issues were included in Uruguay Round because they were of basic interest to USA. US were the largest exporter of agricultural products, and largest exporter of services.

It was suffering from intellectual piracy as also from emergency provisions of GATT under which members could take action to cope with balance of payments crises.

It was feeling that its investments abroad were receiving a treatment which was inferior to that being extended to domestic investment by host countries. For example, a foreign investing firm was often required to export a certain proportion of its production.

The original time table of completing the negotiations within four years could not be adhered to and negotiations had to be halted in December 1990, primarily because the USA and EEC could not reach an agreement.

After several setbacks, the negotiations were finalised on 15th December 1993. It was signed on 15th April 1994 at Marrakesh, Morocco to ratify the results of the Uruguay Round. As a result of this, the WTO became operative on 1 January 1995.



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