The main form of GATT activity was the multilateral negotiations. These negotiations were related to trade barriers, international tariffs, interpretation and making changes in the existing GATT rules and creating the new one. The influence on the political systems of other countries started in the times of GATT. Thus, Brazil and India were criticized for being inflexible. Political systems in these countries after World War II were significantly transformed, and both countries suffered from periods and political and economical instability. GATT demanded stability in the country to implements some regulative rules in the country. Brazilian President Luiz Inácio Lula da Silva argued that the stabilization can be achieved in the richest countries of the world. That time the president of Brazil also demanded the open market for Brazilian agricultural goods in the developed countries, in particular the USA and countries of modern Euro Union.
In 1985 GATT celebrated its fortieth anniversary. In response to this important date as well as some other internal problems GATT launched the eights round of negotiations. It was the biggest negotiations on trade ever and the important stage in WTO history. It took place in Punta del Este, Uruguay. The most important issues negotiated were the following: some policies of certain countries preventing GATT regulations, structural deficiencies in organization, and some new areas of global trade, like trade in intellectual property and services. Ten years later, after WTO foundation, the impact of this negotiations round was significant yet.
The reasons of GATT-WTO transformation
It cannot be said that the functioning of GATT was unsatisfactory: this organization functioned, developed and regulated global trade well enough. However, GATT leading members made a decision to replace it with new regulative institution for several reasons. As was mentioned above, in the middle of 1980th the problem of service trade and intellectual property attracted the attention of GATT. This market sector required regulation, but that time GATT regulated the trade in merchandise goods only. New regulative body should cover trade in intellectual property and services. Moreover, the work of GATT more and more adopted the selective nature. One more task of new regulative body was to re-union the member countries for entire membership.
Nevertheless, not only functional and practical reasons were important for WTO foundation. The establishment of new regulative body also had symbolic and philosophical meaning.
For the above reasons, the creation of a new, permanent trade body became one of the principal objectives about half-way through the GATT’s Uruguay round, which ran from 1986 to 1994. A draft for the new international trade body, the WTO, was drafted and formally approved at the Ministerial Conference held in the ancient trade center of Marrakesh in July of 1994. Under the terms of the so-called “Final Act” signed there, the GATT was replaced by the WTO on 1 January 1995.
On the web site of the WTO the responsibilities of member countries described as the following: “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of development.” (WTO web site)
The members of WTO should recognize the “need for positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in international trade commensurate with the needs of their economic development.” (Ibid)
WTO members also have agreed to contribute to the achievements of these objectives into “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations.”(Ibid)
Thus, in can be concluded that WTO was founded as the GATT successor and inherited its functions and rules, but added some more functions adapted to the modern world.
WTO and its impact on global trade
This chapter discusses the role of WTO of global market with the real examples in different countries. Its influence of the transitions of goods and investments as well as its impact on politics in different countries is in the focus of this chapter.
The role of WTO in global trade is the object of hot debates nowadays. No country can produce all its needs to itself alone, and global trade should compensate the inability of the country to satisfy its own demand. Thus, no country can avoid the participation in global trade market. It cannot be denied that global business environment was very significantly influenced with WTO agreements and rules. WTO also has the impact on the inner trade in member countries. For example, import in India was limited in quantity of goods. WTO forced India to remove quantitative limitations and open its market to import. As the result, Indian domestic producers were forced to compete with the imported goods, especially from China. Simultaneous liberalization of foreign investments increased the competition because of activity of local outfits of multinational corporations. This side of WTO agreements can be considered as negative impact. On the other hand, the liberalization of import opened new opportunities for Indian forms, because now they can access foreign countries opened for Indian imports and investments. The obvious consequence of import liberalization is also the consolidation of Indian market. The growth of competitive pressure pressed out many small businesses from the market. Those Indian forms who can survive on the open market had to seek the way to increase their competitiveness. For example, they could see foreign equity, foreign investors, and foreign technologies. Firms should have become efficient and dynamic to survive the global competition.