TARIFFS, TRADE AND DEVELOPMENT
World Trade Organization’s global membership
Members Members, dually represented by the European Union (EU) Observers Non-participant states Not applicable
Marrakesh, 1994: The signing of the agreement establishing the World Trade Organization, which came into existence on January 1, 1995
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Negotiations were launched to set up an International Trade Organization as a third pillar of the economic order of the free world (the Soviet Union chose a different development model in which participation in global trade long played a negligible role and imposed its will on the countries in its sphere of influence). However, the effort eventually failed as the US Senate refused to ratify the 1948 Havana Charter as the founding document of such an international trade body. Attention then turned to the General Agreement on Tariffs and Trade (GATT), which aimed to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its preamble, its goal was the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.”. Initially signed by 23 countries in 1947 and in force since 1948, GATT developed over the course of nine “rounds”, which gradually reduced or eliminated tariffs, before later covering areas such as anti-dumping and non- tariff measures. While the average tariff levels for major participants were
about 22 percent in 1947 they had fallen below 5 percent when the final “Uruguay” Round started in 1986. Lasting until 1994, the Uruguay Round would become the most ambitious GATT negotiation, covering new areas such as services, capital, intellectual property, textiles and agriculture – some of the most politically sensitive sectors given politicians’ protective instincts. The wide scope reflected developments in the global economy as well as the political push to promote free trade as an engine of growth and prosperity. The facts supported this approach: The past 75 years have seen exceptional growth in world trade. Merchandise exports have grown on average by 6 percent annually. On average trade grew by 1.5 times more than the global economy each year. Total exports in 2023 were 250 times the level of 1948. With 123 participating countries the Uruguay Round was also the largest GATT negotiation and the first in which developing countries played an active role. It concluded with an agreement in Marrakesh on the “Establishment of the World Trade Organization (WTO),” which came into existence on January 1,
1995. Today the WTO has 166 members, accounting for 98 percent of world trade, and is based in Geneva with some 800 staff. The WTO operates the global trade rules, provides a forum for its members to negotiate trade agreements and to resolve trade problems. WTO agreements require governments to make their trade policies transparent by notifying the WTO. All WTO members must undergo periodic scrutiny of their trade policies and practices. Special provisions support developing countries to build their trade capacity, handle disputes and implement technical standards. WTO members operate a non- discriminatory trading system that spells out their rights and obligations. Each member receives guarantees that its exports will be treated fairly and consistently in other members’ markets; and each member promises to do the same for imports into its own market. The system also gives developing economies some flexibility in implementing their commitments. A cornerstone of the multilateral trading system is the most-favored nation status, called Permanent Normal
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