Session 9 - GATT in International Trade Law

Course       : Law in International Business

Lecturer     : Dr. Shidarta, S.H., M.Hum.

Date           : 14  May 2013 (Session 9)

Topic         : GATT in International Trade Law

Method      : GSLC

GATT is one of the sources of law in regulating inter-State trade policy and the rules of trade between businessmen.

GATT was formed in 1947 and brought two changes:

1. GATT and the WTO to take over the role of making it as one attachment WTO rules.

2. GATT principles to frame rules for new fields in the WTO agreements. For example GATS, TRIMS, TRIPS.

Purpose of establishing the GATT: Creating a climate of international trade are obvious to the business community and sustainable trade liberalization, trade jobs and a healthy climate.

The main objective of GATT:

1)  Improving the living conditions of human beings

2) Increase employment opportunities

3) Increase the utilization of the world’s natural resources

4) Increase the production & exchange of goods

The main function of GATT:

1. A set of regulations governing multilateral trade transactions undertaken by GATT member countries.

2. As a forum for trade negotiations and trade liberalization.

3. Keeping the rules clear for the opening of the national market.

Background of GATT:

1.    Formed as a temporary container after the World War two.

2.    The need was felt true multilateral institutions

3.    To prevent a recurrence of the practice in the 1930s protectionism.

Organizational systems of GATT:

1.    A mechanism of decision-making in the WTO is by consensus.

2.     Voting with one country, one vote to win a majority.

Organizational structures of GATT:

1.    Ministerial Conference (Highest decision-making)

2.    General Council (Daily Executive shall consist of representatives of the member)

3.    Council for Trade in Goods (Implementation of agreements in the field of goods)

4.    Council for Trade in Services (Implementation of agreements in the field of service)

5.    Council for Trade Related Aspects of Intellectual Property

6.    Dispute Settlementy Body (Settlement of disputes between members of the forum)

Terms of trade in GATT:

1.    38^th article.

2.    Tokyo round of negotiations produced is anti-dumping regulations, subsidies and non-tariff provisions or sectoral issues.

3.    Multifibre arrangements.

Principles of GATT:

1.    Most favored nation (Giving other countries the same treatment)

2.    National treatment (Must be the same as any imported products in the country)

3.    Prohibition of quantitative restrictions (The export/import can be in any form)

4.    Protection through tariff (Protection of domestic industry through tariff)

5.    Reciprocal (Mutually beneficial to both parties)

6.    Specially for countries that are still developing (Help economic growth)

Work of the Goods Council:

The Goods Council is the one handling the operation of the GATT Agreement & the committees’ duties, working groups & working parties on sectors of activity covered by the Agreement. Which are:

1.    Agriculture

2.    Market access for goods

3.    Sanitary & phytosanitary measures

4.    Subsidies & countervailing measure

5.    Anti-dumping

6.    Customs valuation

7.    Rules of origin

8.    Import licensing

9.    Investment

10.  Safeguards

11.  State trading enterprises

12.  Information technology agreement

Examples of current GATT events:

·         December 2010 – The European Union expresses support for Russia’s bid to join the WTO after Moscow agreed to cut timber export tariffs & rail freight fees. Russia is the only major economy outside the WTO. China says it plans to appeal against WTO ruling that the US was entitled to impose extra duties on China tyre imports.

·         December 2011 – Russia finally joins the WTO after 18 years negotiating its membership. Switzerland brokered a deal to persuade Georgia to lift its veto, which it had imposed after the 2008 Russo-Georgian war. WTO agrees terms for Samoa & Montenegro to join in 2012.

·         January 2012 – The WTO rejects China’s appeal against a ruling that it broke free trade rules by imposing quotas & taxes on exports of key materials.

Reference:

http://www.wto.org/english/tratop_e/gatt_e/gatt_e.htm

http://news.bbc.co.uk/2/hi/europe/country_profiles/2430089.stm

Conclusion:

GATT is more focused on protecting individual rights & it is also an international agreement that contains different set of economic goals than other international agreement organizations have established. GATT also contains precise obligations to manage trade relations & it has also resolved a lot conflicts between the contracting parties.