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The GATT and the regulation of trade barrier: regime dynamics and functions

Published online by Cambridge University Press:  22 May 2009

Jock A. Finalyzson  and
Mark W. Zacher
Jock A. Finalyzson
Affiliation:
Institute of International Relations at the University of British Columbia.
Mark W. Zacher
Affiliation:
Institute of International Relations and Professor of Political Science at the University of British Columbia.
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Abstract

Since the Second World War complex and changing sets of norms and rules have governed trade relations among most countries. They have largely originated from a unique and accidental international organization, the General Agreement on Tariffs and Trade (GATT). We have labeled these norms, rules, and decision-making mechanisms the GATT regime or global trade barriers regime. The importance that GATT members have attached to certain norms has shaped the regime's procedural mechanisms, rules, and implementation of rules. Classifying those norms as sovereignty or interdependence norms, we posit that the strength or autonomy of the regime can be established by analyzing the prominence of the interdependence norms in the issue area. We close by exploring some of the functions of the regime in international trade and political relations.

Type
Articles
Information
International Organization , Volume 35 , Issue 4 , Autumn 1981 , pp. 561 - 602
Copyright
Copyright © The IO Foundation 1981

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References

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6 This definition was accepted by the contributors to the forthcoming special issue of International Organization on “International Regimes.” The conference took place in October 1980 in Los Angeles.

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8 The authors would like to thank Peter Katzenstein and Lynn Mytelka for their suggestions of terms to describe these two sets of norms.

9 The distinction between sovereignty and interdependence norms is not made by other authors. However, they do implicitly address the issue of how much constraint nonsovereignty norms would have to exert in order to state that a regime exists. In the articles to be included in the special issue of International Organization Young and Puchala and Hopkins basically take the point of view that regimes exist in all issue areas, whereas Keohane, Stein, Jervis, and Haas are concerned that a significant constraining effect of nonsovereignty or interdependence norms be established before one concludes that a regime exists.

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49 BISD, 25th Supp., 1979, pp. 32–33; BISD, 26th supp., 1980, pp. 276–79.

50 Following the establishment of a Working Party on “Market Disruption” in 1959, a Long-Term Arrangement Regarding International Trade in Cotton Textiles (LTA) was agreed to in 1962, under the auspices of the GATT (which struck a committee to administer the Arrangement); the LTA was extended for three years in 1967 and again in 1970. A broader arrangement to ensure the so-called “orderly expansion” of trade in virtually all classes of textiles and clothing, the MultiFibre Arrangement (MFA), was negotiated in 1973 and renegotiated to cover the period 1978–82. Membership in the committee and participation in the various textile agreements have been open to both members and nonmembers of GATT. For evaluation and description of these schemes, consult Dam, , The GATT, pp. 296–315Google Scholar; Strange, , “Surplus Capacity,” pp. 310–18Google Scholar; and Taake, H. and Weiss, D., “The World Textile Arrangement: The Exporters' Viewpoint,” Journal of World Trade Law 8 (11-12 1974)Google Scholar. For the contrasting views of exporters and importers on the impact and utility of the recent MFA, see GATT Doc. COM. TEX/15, 5 February 1980, and BISD, 26th supp., 1980, pp. 340–53.

51 The Tokyo Round of Multilateral Trade Negotiations: Report by the Director-General of GATT (Geneva: GATT, 04 1979), pp. 120–21Google Scholar (hereinafter Tokyo Round).

52 Krasner, , “Tokyo Round,” p. 511Google Scholar.

53 Warley, T. K., “Western Trade in Agricultural Products,” in Shonfield, , ed., International Economic Relations, vol. 1, pp. 287–404Google Scholar; Josling, T. E., Agriculture in the Tokyo Round Negotiations, Thames Essay no. 10 (London: Trade Policy Research Centre, 1977)Google Scholar.

54 MTN Studies, vol. 2, p. 63Google Scholar and passim. Also see Golt, Sidney, The GATT Negotiations 1973–79: The Closing Stage (Washington, D. C.: British-North American Committee, 1979), pp. 28–29Google Scholar; Krasner, , “Tokyo Round,” pp. 518–21Google Scholar; Josling, , Agriculture in Tokyo Round; Tokyo Round, pp. 143– 47, 156–64, 177–79Google Scholar.

55 Golt, , GATT Negotiations, p. 25Google Scholar; Krasner, “Tokyo Round,” pp. 521–23; Tokyo Round, pp. 90–95Google Scholar.

56 See Krasner, , “Tokyo Round,” pp. 512–15Google Scholar; Tokyo Round, pp. 75–82. Article VIII of the code permits exclusion of defense-related purchases, and of purchases in connection with public health and safety practices, from the new rules. BISD, 26th Supp., 1980, p. 51. Krasner (pp. 514–15) reports that 85% of U. S. government purchases will not be covered by the code. See also Dam, , The GATT, pp. 199–221Google Scholar.

57 Krasner, , “Tokyo Round,” pp. 515–17Google Scholar; MTN Studies, vol. 6, part 1, pp. 100–102Google Scholar.

58 Josling, , Agriculture in Tokyo Round, p. 11Google Scholar.

59 Balassa, Bela, The Structure of Protection in Developing Countries (Baltimore: Johns Hopkins Press, 1971)Google Scholar; Diaz-Alejandro, Carlos, “Trade Policies and Economic Development,” in Kenen, Peter, ed., International Trade and Finance: Frontiers for Research (Cambridge: Cambridge University Press, 1975)Google Scholar.

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61 Dam, , The GATT, pp. 67–68Google Scholar; MTN Studies, vol. 6, part 1, pp. 23, 48–49Google Scholar. Reciprocity is implicit in section 126 of the 1974 Trade Act.

62 Cited in Evans, John, The Kennedy Round and American Trade Policy: The Twilight of the GATT? (Cambridge: Harvard University Press, 1971), pp. 21–22CrossRefGoogle Scholar.

63 Curzon, , “Management of Trade Relations,” p. 156Google Scholar.

64 Dam, , The GATT, p. 59Google Scholar.

65 Curzon, , “Management of Trade Relations,” p. 160Google Scholar.

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67 Evans, , Kennedy Round, p. 25Google Scholar.

68 Curzon, , “Management of Trade Relations,” pp. 158–59Google Scholar; Johnson, , New Monetary System, pp. 16–18Google Scholar. Johnson notes (p. 23) that flexible exchange rates undermine “the balance-of-payments rationale for… reciprocity.” Johnson has elsewhere contrasted the liberal and instinctively mercantilist ways of viewing tariff reductions: “An Economic Theory of Protectionism, Tariff Bargaining, and the Formation of Customs Unions,” Journal of Political Economy 73 (1965): 256–82CrossRefGoogle Scholar.

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70 Golt (GATT Negotiations) pictures the Tokyo Round as essentially a triangular bargaining process among the “big three,” with Canada, the LDCs, and a few other countries occupying minor roles except when specific issues (e. g., tropical products for the LDCs) were discussed. Preeg similarly discusses the Kennedy Round as if the only players of consequence were the U. S., Japan, the EEC, and the U. K., the latter not then a member of the Community.

71 Evans, , Kennedy Round, pp. 24, 31Google Scholar.

72 Dam, , The GATT, p. 19Google Scholar.

73 Curzon, , “Management of Trade Relations,” p. 161Google Scholar; Dam, , The GATT, pp. 68–77Google Scholar.

74 Interviews, Ottawa, September 1980; interview, U. S. trade officials, November 1980.

75 Golt, , GATT Negotiations, pp. 22–23Google Scholar; Krasner, , “Tokyo Round,” pp. 514–18Google Scholar; interviews, Ottawa, September 1980.

76 Curzon, , “Management of Trade Relations,” p. 206Google Scholar.

77 Hudec, Robert E., Adjudication of International Trade Disputes, Thames Essay no. 16 (London: Trade Policy Research Centre, 1978), p. 17Google Scholar; emphasis added.

78 Preeg, , Traders and Diplomats, pp. 227–30Google Scholar; Kock, , International Trade Policy, p. 245Google Scholar.

79 The submissions of the LDCs to the “framework” negotiating group can be found in GATT Docs. MTN/FR/W/14 (Mexico), MTN/FR/W/9 (India), MTN/FR/W/7 (Pakistan), and MTN/FR/W/1 (Brazil).

80 BISD, 26th Supp., 1980, p. 204.

81 Balassa, Bela, The Tokyo Round and Developing Countries, World Bank Staff Working Paper no. 370 (02 1980)Google Scholar.

82 Interview, Ottawa, September 1980.

83 BISD, 26th Supp., 1980, p. 205. The graduation concept envisages an improvement in LDCs' “trade situation” to the point where they are expected “to participate more fully in the framework of rights and obligations under the General Agreement.”

84 Curzon, , “Management of Trade Relations, p. 152Google Scholar.

85 Articles 111: 3, XXIV, XI: 2, XVI: 3, XX, XXI.

86 Jackson, , World Trade, pp. 60–64Google Scholar.

87 These other minor, temporary escape clauses concern the withdrawal or modification of tariff concessions (Article XXVIII) and the authorization of “exceptional” duties in cases where dumping or subsidization allegedly occurs (permitted by Article VI, the Kennedy and Tokyo Round Antidumping Codes, and the Tokyo Round Subsidies/Countervailing Duties Code).

88 BISD, 26th supp., 1980, pp. 205–209.

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90 Interview, Ottawa, September 1980.

91 Balassa, , “The ‘New Protectionism’,” p. 422Google Scholar; Dam, , The GATT, pp. 33–34Google Scholar.

92 Dam, , The GATT, pp. 32–34Google Scholar; Curzon, , “Management of Trade Relations,” pp. 217–20Google Scholar. See the report of the Working Party that examined a 1971 Danish surcharge, where it was concluded that, although “not explicitly covered by any provision of the GATT,” the Danish surcharge was consistent with the “spirit” of GATT. It was further noted: “Quantitative restrictions provided for in Article XII would have had a more serious effect on the interests of its trading partners.” BISD, 19th supp., 1973, pp. 129.

93 For example, all the contracting parties having recourse to quantitative restrictions under the balance-of-payments safeguard provision in 1976, 1977, 1978, and 1979 have been LDCs, and all have done so under Article XVIII.

94 GATT Doc. L/4679, “Modalities of Application of Article XIX,” 5 July 1978.

95 Tumlir, Jan, “A Revised Safeguard Clause for GATT?” Journal of World Trade Law 7 (07-08 1973), p. 405Google Scholar and passim; Meier, Gerald, “Externality Law and Market Safeguards: Applications in the GATT Multilateral Trade Negotiations,” Harvard International Law Journal 18 (Summer 1977), pp. 496–97, 523Google Scholar; Bhagwati, “Market Disruption.”

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99 In 1955, the U.S. obtained a waiver to permit the use of import quotas regardless of whether production controls were employed, as required by the Agricultural Adjustment Act. This was “a grave blow to GATT's prestige” (Dam, , The GATT, p. 260Google Scholar), and was the first major step to remove agriculture from GATT rules. Jackson, (World Trade, p. 548)Google Scholar notes that because of the size of the U. S. market, the impact of this waiver “on world trade has probably been more extensive” than that of any other. The Community's Common Agricultural Policy has no doubt been infinitely more disruptive, but it is not covered by a waiver. Evans notes that “Community producers are insulated from the effect of any price competition with the outside world” (Kennedy Round, p. 84).

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102 BISD 7thSupp., 1959, p. 28.

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104 GATT Press Release 962 (1966).

105 Jackson describes the legal obligations contained in Part IV as “soft” (World Trade, p. 647). Dam notes that the new chapter contains “a great deal of verbiage and very few precise commitments” (The GATT, p. 237).

106 Ibid., p. 239.

107 Tokyo Round, p. 93.

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122 BISD, 26th Supp., 1980, p. 210.

123 GATT Doc. MTN/FR/W17.

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129 Jackson, , World Trade, pp. 30–31Google Scholar.

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134 Dam, , The GATT, p. 62Google Scholar.

135 Ibid.

136 BISD, 4th Supp., 1956, p. 80.

137 Curzon, , “Management of Trade Relations,” p. 173Google Scholar.

138 Dam, , The GATT, p. 62Google Scholar.

139 Ibid., pp. 61–77; MTN Studies, vol. 2, p 34–35.

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142 Curzon, , “Management of Trade Relations,” p. 205Google Scholar.

143 Tumlir, Jan, “A Revised Safeguards Clause for GATT?” Journal of World Trade Law 7 (07-08 1973), p. 407Google Scholar; Bhagwati, “Market Disruption.”

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146 Curzon, , “Management of Trade Relations,” p. 206Google Scholar.

147 Hudec, Adjudication of International Trade Disputes; Maciel, George A., The International Framework for World Trade: Brazilian Proposals for GATT Reform (London: Trade Policy Research Centre, 1977), pp. 11–12Google Scholar.

148 Hudec, , Adjudication of International Trade Disputes, pp. 7–11Google Scholar.

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150 Shonfield, , International Economic Relations of the Western World: An Overall View,” in Shonfield, , ed., International Economic Relations, vol. 1, pp. 47–48Google Scholar.

151 Tumlir, Jan, “Emergency Action Against Sharp Increases in Imports,” in Corbet, Hugh and Jackson, Robert, eds., In Search of a New World Economic Order (London: Croom Helm, 1974), p. 266Google Scholar.

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153 Cox, Robert and Jacobson, Harold, “Introduction,” in Cox, and Jacobson, , eds., The Anatomy of Influence, pp. 5–6.Google Scholar.

154 See Keohane's article in the forthcoming special issue of International Organization.

155 Keohane also notes that this is a function of regimes.

156 Young, Oran R., Compliance and Public Authority: A Theory With International Applications (Baltimore: Johns Hopkins University Press, 1979), pp. 18–25Google Scholar.

157 Interviews.

158 Shonfield, , “An Overall View,” p. 126Google Scholar; Curzon, “GATT: Traders' Club,” passim.

159 Jackson, , “Governmental Trade Disputes,” p. 2Google Scholar.

160 Jackson, , “The Birth of the GATT-MTN System,” p. 26Google Scholar.

161 Evans, , Kennedy Round, p. 318Google Scholar.

162 Hudec, , Adjudication, p. 36Google Scholar.

163 Interviews with Canadian trade policy officials, September 1980, and with U. S. officials, November 1980.

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165 Golt, GATT Negotiations, passim.

166 MTN Studies, vol. 4, p. 7.

167 Blackhurst, , Marian, and Tumlir, , “Trade Liberalization,” p. 9Google Scholar.

168 Between 1948 and 1973, the volume of world trade increased sixfold, growing at an average annual rate of 7.This growth rate surpassed that of world production, which was also growing rapidly. Since 1973, growth rates have slowed, but trade has generally continued to expand faster than production. See ibid., pp. 7–19, and Cooper, Richard, The Economics of Interdependence (New York: MCGraw-Hill, 1968), chap. 3Google Scholar.