HISTORY OF THE MULTILATERAL TRADING SYSTEM
Seventy-five years ago, on 30 October 1947, 23 countries signed the Final Act of the General Agreement on Tariffs and Trade (GATT). Devised as a temporary agreement that would boost international trade, the GATT regulated world trade for almost 50 years before being succeeded by the birth of the World Trade Organization in 1995. However, the GATT still exists as the WTO's umbrella treaty for trade in goods.
DDG González said that the GATT's durability owes much to the fact that it is underpinned by simple principles, such as non-discrimination, gradual reform through successive rounds of negotiations, and flexibility in the form of exceptions allowing members space for domestic policies. She underlined that the 75th anniversary should be a reminder that the GATT is a tool for international cooperation which is now all-the-more needed in view of the multiple crises affecting the world.
In her introductory remarks, WTO Director-General, Dr. Ngozi Okonjo-Iweala, recognised the incontrovertible role of global trade in driving prosperity around the world and in lifting over a billion people out of poverty since the establishment of the GATT. She said the multilateral trading system is “a jewel worth polishing” and that “the success at the 12th Ministerial Conference was just the start of the reforms that need to be made”.
Professor Irwin looked back at the century-long efforts of nations to come up with a well-functioning trading system, beginning with the Cobden-Chevalier Treaty of 1860 between the United Kingdom and France. He explored the role of international organisations, such as the League of Nations, in fostering the discussion of trading principles which would culminate with the adoption of the GATT in 1947.
Professor Irwin set out some of the differences between the multilateral trading system, safeguarded by the WTO, and the GATT, highlighting in particular the WTO's dispute settlement system. He concluded with three points: first, the world trading system is firmly embedded in the current geopolitical order; second, the path has been long and hard but the payoffs have been enormous; third, a return to economic nationalism and fragmentation is not just economically costly but dangerous.
The recording of the webinar can be found here.
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