Information about Western Hemisphere Hemisferio Occidental
Chapter

2 Results of the Uruguay Round

Editor(s):
Saíd El-Naggar
Published Date:
June 1996
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Author(s)
Jesus Seade

This chapter describes the principal results of the GATT’s eighth round of negotiations, launched in Punta del Este, Uruguay, in September 1986, and concluded in Marrakesh, Morocco, in April 1994- The World Trade Organization (WTO), the principal result of the Uruguay Round, enters into force on January 1, 1995 and replaces the GATT as the basis for trade relations among its members. After an overview of the GATT system and a brief summary of changes in the framework for trade relations contained in the Uruguay Round agreements, the chapter concludes with a description of the steps a country must take to become a WTO member.

The GATT System

The GATT was agreed on October 30, 1947 and entered into force on January 1, 1948 for 23 Contracting Parties. By December 1994, membership in the GATT had risen to 127 Contracting Parties. GATT Contracting Parties that are also members of the Arab Fund for Economic and Social Development include Bahrain, Egypt, Kuwait, Mauritania, Morocco, Qatar, Tunisia, and the United Arab Emirates.

GATT 1947

The GATT is a legal framework for the conduct of trade relations among its members. Main elements include the most-favored-nation (MFN) principle, whereby each member is required to treat products imported from different trading partners on the same basis (Article I). Other central requirements include a prohibition on quantitative restrictions (Article XI), and the “national” treatment of imported products (Article III), so that once imported products are inside the border, they face the same conditions of competition as domestically produced products. Exceptions to these obligations may be invoked under certain conditions, including for the purpose of establishing free trade areas or customs unions, to protect the balance of payments, for health and safety reasons, or for national security.

The original legal framework has been clarified and extended throughout the GATT’s history. In 1966, Part IV on “Trade and Development” was added to the General Agreement. Its provisions include the statement that industrial countries do not expect reciprocity in trade negotiations with developing countries. Part IV also provides for joint action by Contracting Parties to establish international arrangements for primary products to “stabilize and improve conditions of world markets in these products including measures designed to attain stable, equitable and remunerative prices for exports of such products.” In 1979, the Enabling Clause was agreed to provide a permanent legal cover for tariff preferences granted by industrial countries on imports from developing countries under the Generalized System of Preferences (GSP), and special provisions for preferential trade arrangements concluded among developing countries.1 The provisions of Part IV and the Enabling Clause have been kept under continuous review by the Committee on Trade and Development.

The legal framework for trade relations has also been extended through GATT negotiating rounds (Table 1). These were originally conceived as occasions for the reciprocal exchange of concessions on tariffs between trading partners, the benefits of which were made available to all GATT Contracting Parties through the operation of the MFN principle. Starting with the Kennedy Round, the results of GATT rounds have expanded beyond tariffs, and the participation of developing countries in these negotiations has increased substantially.

Table 1.GATT Negotiating Rounds
Tariff Cut1
YearNegotiating RoundParticipantsResults(in percent)
1947Geneva23Tariffs
1949Annecy13Tariffs
1951Torquay38Tariffs63
1956Geneva26Tariffs
1960–61Dillon26Tariffs
1964–67Kennedy62Tariffs; antidumping50
1973–79Tokyo99Tariffs; nontariff measures; framework

for trade relations
33
1986–93Uruguay125Tariffs; nontariff measures; agriculture;

textiles and clothing; services; protection

of intellectual property rights;

functioning of the GATT system
40

On imports of nonagricultural products (excluding petroleum products) of major industrial nations.

On imports of nonagricultural products (excluding petroleum products) of major industrial nations.

The commitments made by GATT Contracting Parties—whether in their schedules of concessions or in the General Agreement—are enforceable through the dispute settlement procedures by claims brought by governments of exporting countries.2 The first step is consultations between the claimant government(s) and the respondent government. If these do not resolve the matter to the satisfaction of the claimant, the Contracting Parties may be requested to establish an expert group or panel to examine the matter and make a report to the Contracting Parties. The GATT Contracting Parties may adopt these reports as interpretations of the rights and obligations of members.3

Major Issues in the Functioning of the GATT System

Since the inception of the GATT, the status under the multilateral rules affecting trade in agriculture, both de jure and de facto, has been different from that of nonagricultural products. In the Tokyo Round, no progress was made in binding and reducing tariffs on agricultural products or in developing effective multilateral disciplines for export subsidies. In the 1980s, trading partners increasingly challenged through the dispute settlement procedures the consistency under the GATT of the nontariff measures that many Contracting Parties had in place to restrict the importation of agricultural products.

Another issue was the restraints on exports of textile and clothing products of developing countries and the economies in transition. In 1994, restraints notified under the 1973 Multifibre Arrangement (MFA) by Austria, Canada, the European Union, Finland, Norway, and the United States totaled 145 bilaterally agreed or unilaterally imposed restraints on exporters of textiles and clothing.4 Exporters of products other than textiles and clothing have at times been subject to “gray area” measures.5

The incomplete membership of the agreements reached in the Tokyo Round on antidumping, subsidies and countervailing measures, customs valuation, import licensing, and technical barriers to trade was also an issue. Industrial countries generally chose to accept the new agreements and consequently applied a transparent and predictable regulatory regime for nontariff measures, with procedural guarantees for exporters. Many developing countries, however, chose not to accept any, and others only some, of the new agreements, although the treatment provided for under those agreements was extended to all GATT members through the MFN principle.

The fourth major issue concerned the overall functioning of dispute settlement in the GATT system. Recourse to the procedures, particularly by developing countries, rose substantially during the Uruguay Round (Table 2). The overall effectiveness of dispute settlement under the General Agreement, however, was affected by the nonadoption of panel reports in certain highly politicized cases and by concerns over the implementation of adopted panel reports. Dispute settlement involving antidumping and countervailing measures has been affected by the low proportion of panel reports adopted by the Committees.

Table 2.Number of Requests for Consultations in the GATT System, 1989–94
ApplicantRespondent
Country GroupGAADSubsidies/

CVD
GPGAADSubsidies/

CVD
GP
Total71211437124143
Industrial countries38121333921143
Developing countries3291031300
Transition economies10001000
Note: GA = General Agreement; AD = Antidumping Agreement; Subsidies/CVD = Subsidies and Countervailing Measures Agreement; GP = Government Procurement. The data, which include only formal notifications of requests for consultations by the Secretariat, are known to be comprehensive only for the General Agreement.
Note: GA = General Agreement; AD = Antidumping Agreement; Subsidies/CVD = Subsidies and Countervailing Measures Agreement; GP = Government Procurement. The data, which include only formal notifications of requests for consultations by the Secretariat, are known to be comprehensive only for the General Agreement.

Results of the Uruguay Round

The Declaration adopted on September 20, 1986 at Punta del Este, Uruguay, established a three-part program covering general principles, standstill and rollback, and negotiating objectives for trade in goods and services. The negotiations ended on December 15, 1993, and the results were formally endorsed by Uruguay Round participants at Marrakesh, Morocco, on April 15, 1994. Governments have subsequently submitted the Marrakesh Agreement Establishing the World Trade Organization for approval to domestic authorities. The Implementation Conference held on December 8, 1994 confirmed the date of January 1, 1995 for the entry into force of the WTO, at which time up to one hundred GATT Contracting Parties will have completed the ratification process.

Establishment of the World Trade Organization

The WTO is a single institutional framework encompassing all the agreements and legal instruments negotiated in the Uruguay Round covering trade in goods, services, and intellectual property protection, as well as the dispute settlement procedures and provisions for the regular monitoring of policies of WTO members (Figure 1). In addition, there are a number of Ministerial Decisions and Declarations that supplement the agreements reached.

Figure 1.Institutional Framework of the World Trade Organization

Contracting Parties of GATT 1947 as of the date of entry into force of the WTO Agreement, and the European Communities, that accept the Uruguay Round agreements and that have finalized their schedules of commitments on goods and services (the “single undertaking”) shall become original members of the WTO.6 Flexibility provisions for developing countries, and in particular for the least developed countries, in most of the agreements include (1) longer transition periods for the full implementation of most obligations, a lower level of obligation for developing countries, and exemptions for least developed countries; (2) provision for technical assistance to developing countries; and (3) provisions to ensure more favorable treatment to developing country exporters in the application of nontariff measures. The Decision on Measures in Favor of Least-Developed Countries provides for technical assistance to help these countries realize the benefits of the multilateral trading system more effectively: 16 least developed countries are taking advantage of the additional year provided for the finalization of schedules of commitments on goods and services that ends on April 15, 1995.

The WTO will be headed by a Ministerial Conference meeting at least once every two years. A General Council will be established to oversee the operation of the WTO between meetings of the Ministerial Conference, including acting as a Dispute Settlement Body (DSB) and administering the Trade Policy Review Mechanism (TPRM). The General Council will have three principal subsidiary bodies—the Goods Council, the Services Council, and the TRIPs (Trade-Related Intellectual Property Rights) Council—reflecting the tripartite nature of the Multilateral Trade Agreements. Unless otherwise provided for, decisions will be taken by consensus, continuing the GATT practice.

Five specific tasks have been assigned to the WTO:

  • to facilitate the implementation of the results of the Uruguay Round;
  • to provide a forum for multilateral trade negotiations and a framework for the implementation of their results;
  • to administer the dispute settlement procedures;
  • to administer the TPRM; and
  • to cooperate with the IMF and the World Bank.

Dispute Settlement

A key objective of the negotiations was to make the multilateral rules more effective by improving their enforceability. In comparison with the previous GATT system, a major change in the Understanding on Dispute Settlement is the integration of all the dispute settlement procedures established under the individual agreements (goods, services, TRIPs, and the plurilateral agreements) into a single system operating under a Dispute Settlement Body (DSB). In addition, one of the central provisions of the understanding reaffirms that members shall not unilaterally make determinations of violations or suspend concessions, but shall make use of the multilateral dispute settlement rules and procedures of the understanding.

In relation to the GATT system, the WTO dispute settlement system also provides claimants with automaticity for the establishment of a panel, adoption of the panel ruling, and authorization of countermeasures in the event that an adopted panel ruling is not implemented. This greater automaticity has been accomplished by a “negative consensus” approach for decisions taken by the DSB: a consensus will be needed in order to halt the proceedings from advancing at any stage of the formal dispute settlement procedures.

To ensure that automaticity in the adoption of panel reports is accompanied by greater confidence in the legal findings, an Appellate Body will be established to hear appeals. If an appeal is not made, the panel report will be adopted. If an appeal is made, the report of the Appellate Body shall be adopted by the DSB and unconditionally accepted by the parties, unless the DSB decides by consensus against adoption.

Following adoption of the panel ruling, the party concerned must notify its intentions with respect to implementation of the adopted recommendations. Under the GATT, panels have generally recommended that an inconsistent measure be brought into conformity with the rules. If such a step is not taken in reasonable time, compensation or the suspension of concessions or other obligations would be available as temporary measures. If no satisfactory compensation is agreed, the claimant may request authorization from the DSB—acting according to the negative consensus approach—to retaliate. The general principle is that suspension of concessions should take place in the same sector of trade; for instance, retaliation over a violation of commitments made in the area of goods should also concern goods. If this is not practicable or effective, and if the circumstances are serious enough, the suspension of concessions may be made under another agreement; for instance, retaliation over a violation of commitments made in the area of TRIPs may concern goods.

Trade Policy Review Mechanism

Regular monitoring and surveillance of members’ trade policies and practices and their impact on the functioning of the multilateral trading system have been achieved by the TPRM, in place since 1989 on a provisional basis.7 Each WTO member will report regularly to the Trade Policies Review Body (TPRB), a report will also be prepared by the WTO Secretariat, and the TPRB will hold a session to discuss the substance of these reports. As part of their monitoring activities, WTO members will also continue to appraise annually developments that are having an impact on the multilateral trading system, assisted by an annual report by the Director-General setting out major activities of the WTO and highlighting significant policy issues affecting the trading system.

Trade in Goods

The cornerstone of the multilateral rules for trade in goods is GATT 1994. To facilitate the integration of all merchandise trade into the multilateral framework, supplementary agreements cover agriculture, textiles and clothing, “gray area” measures, and trade-related investment measures (TRIMs). Governments are also required to administer a wide range of trade policy measures according to prescribed rules, so as to maintain open and secure markets for world trade.

GATT 1994

GATT 1994 consists of

  • the provisions of the legal instruments that have entered into force under GATT 1947 before the date of entry into force of the WTO;8
  • understandings on the interpretation of GATT provisions dealing with schedules of concessions (Article II: 1(b)), state trading enterprises (Article XVII), balance of payments provisions (Articles XII and XVIII:B), customs unions and free trade areas (Article XXIV), waivers (Article XXV), modification of GATT schedules (Article XXVIII), and nonapplication of the General Agreement (Article XXXV); and
  • the schedules of concessions on measures affecting trade in goods, as modified or extended by commitments made in the Uruguay Round.

Of particular note is that the GATT 1947 provisions applying to developing countries will be incorporated in the WTO, and, in addition to the measures in the Uruguay Round agreements applying to developing countries (and, in particular, least developed countries), will be kept under continuous review by the Committee on Trade and Development.

As regards the contents of schedules of concessions, two aspects are important. The first is the “binding” of measures of protection, which represents a commitment by the government concerned not to increase the level beyond that specified in the schedule except by negotiation with affected trading partners. The second aspect is the reduction of trade barriers, which, together with binding, ensures that markets will be more open and more secure.

The share of imports of nonagricultural products (excluding petroleum products) subject to bindings has risen from 94 to 99 percent for developed countries, from 13 to 61 percent for developing economies, and from 74 to 96 percent for transition economies (Table 3).9 In the case of agricultural products, “tariffication” replaces the package of protective measures (including the existing tariff) by a single new tariff that is then bound at a level estimated to provide substantially the same level of protection as the existing package of measures. As a result, once the Uruguay Round commitments are implemented, virtually 100 percent of agricultural imports will be bound, and there will be virtually no nontariff barriers.10

Table 3.Tariff Bindings on Industrial (Excluding Petroleum Products) and Agricultural Products Before and After the Uruguay Round(In percent)
Industrial ProductsAgricultural Products
Percent of tariff lines boundPercent of imports under bound ratesPercent of tariff lines boundPercent of imports under bound rates
Country GroupBeforeAfterBeforeAfterBeforeAfterBeforeAfter
Total438368873510063100
By major country group
Developed countries789994995810081100
Developing economies217313611710022100
Transition economies739874965710059100
By region
North America99100991009210094100
Latin America38100571003610074100
Western Europe798298984510087100
Central Europe639868974910054100
Africa13692690121008100
Asia166832701510036100

The new tariff commitments made by developed countries represent a 40 percent reduction in the average tariff on imports of nonagricultural products (excluding petroleum products), from 6.3 percent to 3.7 percent (Table 4), and an increase from 20 to 44 percent in the proportion of imports subject to bound MFN zero duties. The overall reduction in the average tariff applied to imports from developing countries is lower (37 percent compared with 40 percent) because of the below-average tariff cuts applied to textiles and clothing, which are relatively more important in the exports of developing countries. The reductions in tariffs that the new commitments of developing economies represent are difficult to ascertain, since base (1986) tariff levels are not available for all participants. In instances where developing countries have committed to bind 100 percent of tariff lines, the levels of tariffs in schedules have been set above the currently applied rates (ceiling bindings), which generally reflect reductions undertaken autonomously in the course of the Uruguay Round.

Table 4.Developed Country Tariff Reductions by Major Industrial Product Group (Excluding Petroleum Products) Before and After the Uruguay Round(In billions of U. S. dollars and percent)
Tariff Averages Weighted by
Import ValueImports from all sourcesImports from developing countries
All sourcesDeveloping countriesBeforeAfterPercent reductionBeforeAfterPercent reduction
All industrial products736.9169.76.33.8406.84.337
Fish and fish products18.510.66.14.5266.64.827
Wood, pulp, paper, and furniture40.611.53.51.1694.61.763
Textiles and clothing66.433.215.512.12214.611.323
Leather, rubber, footwear31.712.28.97.3188.16.619
Metals69.424.43.71.4622.70.967
Chemicals and photographic supplies61.08.26.73.7457.23.847
Transport equipment96.37.67.55.8233.83.118
Nonelectric machinery118.19.84.81.9604.71.666
Electric machinery86.019.26.63.5476.33.348
Mineral products and precious stones73.022.22.31.1522.60.869
Manufactured articles, n.e.s.76.110.95.52.4566.53.152

For crude and refined petroleum products—of particular export interest to most members of the Arab Fund for Economic and Social Development (Table 5)—the overall change in the tariff treatment of crude and refined products once the Uruguay Round results are implemented is difficult to ascertain by virtue of the high proportion of countries maintaining specific, as opposed to ad valorem, duties on the products concerned (Table 6).11 After the results are implemented, crude petroleum will continue to be characterized by a low level of bindings in major markets (only the European Union and Brazil have bound HS 2709), although the tariff treatment is generally low or duty-free. For refined products, the level of bindings is substantially higher than for crude petroleum, but average tariffs (where available) are also generally higher. The post-Uruguay Round situation of crude and refined petroleum—in comparison with that of other products—is mainly a reflection of the virtual absence of the major exporter interests from GATT tariff negotiating rounds.

Table 5.Export Interests of Members of the Arab Fund for Economic and Social Development
CountryProduct Composition of Exports (in percent)
JordanMineral products, precious stones, and metals (74); metals (6); chemicals and photographic supplies (5)
United Arab EmiratesPetroleum (83); mineral products, precious stones,1 and metals (11)
BahrainPetroleum (53); metals (31); chemicals and photographic supplies (5); mineral products, precious stones, and metals (5)
TunisiaTextiles and clothing (35); petroleum (18); mineral products, precious stones, and metals (15); chemicals and photographic supplies (6); fishery products (6); oilseeds, fats, and oils (5)
AlgeriaPetroleum (73); mineral products, precious stones, and metals (23)
Saudi ArabiaPetroleum (85); chemicals and photographic supplies (7); mineral products, precious stones, and metals (6)
SudanOther agricultural products (43); oilseeds, fats, and oils (19); flowers, plants, and vegetable materials (12); animals (7); grains (5)
Syrian Arab RepublicPetroleum (71); other agricultural products (8); transport equipment (6)
SomaliaFruit and vegetables (54); fishery products (18); other agricultural products (15)
IraqPetroleum (98)
OmanPetroleum (97)
QatarPetroleum (81); mineral products, precious stones, and metals (10); chemicals and photographic supplies (8)
KuwaitPetroleum (92); mineral products, precious stones, and metals (6)
LebanonMineral products, precious stones, and metals (34); textiles and clothing (12); metals (11); other agricultural products (11)
LibyaPetroleum (92)
EgyptPetroleum (58); textiles and clothing (12); other agricultural products (10); metals (9)
MoroccoTextiles and clothing (23); mineral products, precious stones, and metals (21); fruits and vegetables (15); fishery products (12); chemicals and photographic supplies (9)
MauritaniaMetals (43); fishery products (54)
YemenNot available
PalestineNot available
Table 6.Post-Uruguay Round Tariff Treatment of Crude and Refined Petroleum Products in Major Markets
Crude PetroleumRefined Petroleum
ImporterPercentage of lines boundPost-round simple average ad valorem tariffPercentage of lines boundPost-round simple average ad valorem tariff
European Union1000.01002.6
United States0n.a.100n.a.
Japan0n.a.35n.a.
Singapore00.0013.61
Korea05.07211.0
Brazil100n.a.100n.a.
Canada00.4805.8
India0n.a.0n.a.
n.a. = Not available in percentage terms; specific duties apply.

Specific duties apply on one quarter of imports of refined petroleum products.

n.a. = Not available in percentage terms; specific duties apply.

Specific duties apply on one quarter of imports of refined petroleum products.

Agriculture

Agriculture has been integrated into the multilateral trading system through new rules of general application to market access, export subsidies, and domestic support, with an important step being made toward liberalizing trade in agriculture. In addition, as a result of the Agreement on the Application of Sanitary and Phytosanitary Measures, there will be significantly improved multilateral disciplines that will make it possible to minimize the adverse impact of these measures on international trade in agricultural products.

The Agriculture Agreement prohibits the use of nontariff border measures on agricultural products and binds all tariffs. For agricultural products where intervention took the form of nontariff measures, the “tariffication” process led to a tariff being established, and provisions were made for the maintenance of current market access opportunities and the establishment of new minimum access opportunities (at reduced tariff rates), to be expanded from 3 to 5 percent of domestic consumption over the six-year (ten-year for developing countries) implementation period.12 Tariff reductions were required for both the products subjected to tariffication and the vastly more numerous “tariff-only” products (products that, in the past, faced only tariffs at the border). The schedules of industrial countries show tariff reductions on agricultural products amounting to a simple average of 37 percent.

During the implementation period, the value of direct export subsidies will be reduced by industrial countries to a level 36 percent below the 1986–90 base-period level, and the quantity of subsidized exports reduced by 21 percent from the same base period (two-thirds reductions for developing countries).13 Taken together, the commitments made will lead to a decline in total outlays on subsidized quantities by 36 percent, from $22.5 billion to $14.5 billion. The prohibition of the use of export subsidies (with certain exceptions for developing counties) on all products not subject to reduction commitments will also play an important role in improving competition on world markets.

The Total Aggregate Measure of Support, which covers all domestic support that does not qualify for exemption, will be reduced by 20 percent for industrial countries (13 percent for developing countries). Taken together, these commitments will lead to a decline in the Total Aggregate Measure of Support from $197 billion to $162 billion by the end of the transition period. Exempt policies include those in the “green box” (general government services and decoupled direct income supports), some measures that are an integral part of the development programs of developing countries, direct payments under production-limiting programs, and any product-specific support amounting to less than 5 percent (10 percent for developing countries) of the value of production of the product concerned (“de minimis” support).

The participants in the Uruguay Round have recognized the possibility of adverse effects of the agricultural reform program in the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. The decision sets out objectives with regard to the provision of food aid, the provision of basic foodstuffs in full grant form, and aid for agricultural development. It also refers to the possibility of assistance from the IMF and the World Bank with respect to the short-term financing of commercial food imports. The follow-up of the decision is to be monitored by the Committee on Agriculture and subject to regular review by the Ministerial Conference of the WTO.

Textiles and Clothing

The Agreement on Textiles and Clothing provides for the eventual elimination of restraints on textiles and clothing after a ten-year transition period. Restraints applied under the MFA will be phased out in four stages, starting with the date of entry into force of the WTO. Concurrent with this integration process, there is a program providing for the progressive liberalization of existing quotas imposed under the MFA, with an accelerated phase-out for small exporters. The agreement also provides for a transitional safeguard mechanism in the event of import surges, which applies under certain conditions in respect of any product not yet integrated into the GATT and not already under restraint, with more favorable treatment provided to least developed countries and small suppliers.

Trade-Related Investment Measures

The Agreement on Trade-Related Investment Measures (TRIMs) applies to performance requirements, such as local content requirements or trade-balancing requirements (which can be found to be inconsistent with the national treatment provision or the prohibition on quantitative restrictions). GATT-inconsistent TRIMs are required to be notified and eliminated within a transition period of two years (industrial countries), five years (developing countries), or seven years (least developed countries). A further extension may be requested by developing and least developed countries.

Agreements on Nontariff Barriers

The agreements on technical barriers to trade, subsidies and countervailing measures, antidumping, import licensing, and customs valuation are more extensive versions of the agreements concluded on these issues in the Tokyo Round, while new agreements concern the application of sanitary and phytosanitary measures, safeguards, preshipment inspection, and rules of origin. The agreement on rules of origin contains a commitment to agree on guidelines for their use within three years.

As noted earlier, the agreements concluded in the Tokyo Round had failed to acquire a multilateral status. In contrast, the single undertaking will ensure that the agreements on nontariff measures will be applied by all WTO members. However, the Tokyo Round Agreements on Government Procurement (which will be superseded by a new agreement), the Civil Aircraft Agreement (negotiations on a new agreement are continuing), and the Arrangements on Dairy and Bovine Meat will retain their plurilateral status. Of particular note is the new Agreement on Government Procurement, which will come into force on January 1, 1996. The new agreement expands the existing agreement by requiring bid-challenge procedures and increases the coverage of procurement subject to the rules by a factor of about ten (to an amount of several hundred billion dollars).

For WTO members applying nontariff measures, the agreements provide for precise guidelines concerning their application, including transparency, predictability (including specified criteria for decisions), and procedural guarantees for exporters. Most of these agreements also contain provisions to ensure more favorable treatment of developing country exporters in the application of nontariff measures.

Also of note is the Agreement on Subsidies and Countervailing Measures, which defines a subsidy (as a financial contribution by a government) and clarifies the subsidies that are subject to the disciplines of the agreement, including those that may form the basis for countervailing measures (those subsidies that are provided specifically to an enterprise or industry, as opposed to generally available subsidies). A further step has also been taken to extend the framework of disciplines to limit the use of trade-distorting subsidies.

The administration of countervailing or antidumping measures has been clarified by (1) greater and more detailed disciplines on the conduct of investigations; (2) establishing the criteria to terminate an investigation (de minimis thresholds for margins of subsidization/dumping or the volume of dumped/subsidized products, or negligible injury);14 (3) providing interested parties with full notice and a right to present evidence; (4) clarifying the criteria used to determine injury to the domestic industry; (5) requiring more detailed public notice and explanation of determinations; and (6) establishing that a “sunset” clause of five years applies to measures unless a determination is made that, in the event of the termination of the measures, subsidization/dumping and injury would be likely to continue or recur.

The Agreement on Safeguards requires investigations, including an injury analysis, to determine whether safeguard measures are required. It sets limits on the restrictive nature of import quotas and time limits for which the measures can be in place, and for the period for which they cannot be reimposed. The possibility for “quota modulation” under certain specified circumstances is subject to multilateral surveillance.15 The agreement requires that “gray area” measures not in conformity with the provisions of Article XIX be brought into conformity with the agreements or phased out within four years after the entry into force of the agreement establishing the WTO.16

A number of agreements on non-tariff measures provide for exemptions from or transition periods for obligations, and for technical assistance. For example, developing countries are not expected to use international standards that are not appropriate to their situation as a basis for their technical regulations or standards. With regard to export subsidies on industrial products, least developed countries and low-income developing countries are not subject to the prohibition on export subsidies applicable to WTO members, and other developing country members have a transition period of at least eight years to phase out such measures (whose prohibition for industrial countries is confirmed with immediate effect) and may request a further extension. With respect to customs valuation, developing country members that are not signatories to the Tokyo Round Agreement may delay the application of provisions for five years and may request a further extension.

Services

The objective of establishing a multilateral framework of principles and rules for trade in services and the liberalization of trade in this sector has been achieved by the General Agreement on Trade in Services (GATS). The GATS covers trade in services in all forms, including through commercial presence and the temporary entry of natural persons. The basic principle is MFN, although measures that are inconsistent with this obligation can be maintained in principle for not more than ten years. In addition, transparency applies to domestic regulations relevant to trade in services.

The GATS provides for the progressive liberalization of trade in services through the scheduling of commitments. Market access and national treatment apply to the service activities specified in schedules of commitments, and subject to the terms and conditions specified therein. Ninety-six schedules have been certified (the European Union has submitted a common schedule on behalf of its member states), which together contain the results of the market access negotiations for services in the Uruguay Round. The GATS explicitly provides for future rounds of negotiations with a view to achieving a progressively higher level of liberalization; the first such round is to begin within five years of the entry into force of the agreements.

No service sectors are excluded from the scope of the agreement, but participants were free to specify the services for which they would provide market access and national treatment. Accordingly, there are important differences in the coverage of the schedules of different participants (Table 7). The schedules of the major industrial participants, for example, cover nearly all sectors, although with exceptions in such areas as maritime transport and audiovisual services. For developing countries, the sectoral coverage of commitments is generally lower than for industrial countries. Tourism-related services (hotels and restaurants, travel agencies and tour operators) contain the highest level of commitments, reflecting the current importance of this sector in the foreign exchange earnings of many developing countries (foreign exchange receipts from tourism taking place in the domestic economy are counted as credits in the balance of payments accounts). Many developing countries have also made commitments on financial services, business services, and construction services. Negotiations are already in progress with a view to the expansion of the existing commitments in maritime transport, financial services, and the movement of natural persons. Basic telecommunications, on which it was generally agreed that commitments would not be made in this round, are also the subject of ongoing negotiations.

Table 7.Number of Bound Service Activities of GATS Participants in the General Agreement on Trade in Services
Number of Bound Service ActivitiesParticipants
More than 100Austria, European Union, Japan, Switzerland, United States
Between 81 and 100Australia, Canada, Czech Republic, Hungary, Iceland, Norway, Slovak Republic, Sweden
Between 71 and 80Finland, Hong Kong, Korea, Liechtenstein, New Zealand, South Africa, Thailand, Turkey
Between 61 and 70Dominican Republic, Malaysia, Mexico
Between 51 and 60Argentina, Poland, Singapore, Venezuela
Between 41 and 50Brazil, Colombia, Israel, Kuwait, Morocco, Nicaragua, Philippines, Romania
Between 31 and 40Chile, Cuba, Pakistan, Ghana, India, Jamaica
Between 21 and 30Aruba, Brunei Darussalam, Egypt, El Salvador, Kenya, Macau, Netherlands Antilles, Nigeria, Peru, Senegal, Uruguay
Between 11 and 20Antigua and Barbuda, Benin, Costa Rica, Côte d’Ivoire, Gabon, Guatemala, Guyana, Honduras, Mauritius, Mozambique, Trinidad and Tobago, Tunisia, Zambia, Zimbabwe
Between 1 and 10Algeria, Bahrain, Bangladesh, Barbados, Belize, Bolivia, Burkina Faso, Cameroon, Congo, Cyprus, Dominica, Fiji, Grenada, Indonesia, Madagascar, Malta, Myanmar, Namibia, New Caledonia, Niger, St. Lucia, Sri Lanka, St. Vincent and the Grenadines, Suriname, Swaziland, Tanzania, Uganda

Trade-Related Aspects of Intellectual Property Rights

The Agreements on Trade-Related Aspects of Intellectual Property Rights (TRIPs) was motivated by a desire to reduce distortions in the conditions of international competition resulting from widely varying standards in the protection and enforcement of intellectual property rights, and the lack of a multilateral framework of principles, rules, and disciplines dealing with international trade in counterfeit goods. The TRIPs agreement will be implemented within transition periods generally of 1 year (developing countries), 5 years (developing countries, and transition economies facing special problems in structural reform of their intellectual property systems), or 11 years (least developed countries).17

Subject to limited exceptions, WTO members must provide national treatment and treat nationals of trading partners on the same basis (MFN). The agreement specifies minimum substantive standards of protection, building on those in the Paris and Berne Conventions, for copyright and related rights, including for computer programs, databases, sound recordings and films; trademarks and service marks; geographical indications, including appellations of origin; patents; industrial designs; the layout designs of integrated circuits; and undisclosed information, including trade secrets.

WTO members must provide procedures and remedies under their domestic law to ensure that intellectual property rights can be effectively enforced by foreign right holders. Requirements include provisions on evidence, injunctions, damages, and other civil remedies, including the right of judicial authorities to order emergency provisional action; special border measures against imports of trademark counterfeit and pirated copyright goods; and criminal action including imprisonment or fines (or both) to act as a deterrent to willful trademark counterfeiting or copyright piracy on a commercial scale.

Becoming a WTO Member

Original Members

Contracting Parties of GATT 1947 as of January 1, 1995, and the European Communities, that accept the Uruguay Round agreements and that have finalized their schedules of commitments on goods and services shall become original members of the WTO. Practically all GATT Contracting Parties have finalized their schedules of commitments for goods and services, which form part of the obligations undertaken by prospective members of the WTO.18 The next step in becoming a WTO member is the approval of the WTO Agreement by the domestic authorities; this step has been completed by Bahrain, Kuwait, Mauritania, and Morocco. Up to one hundred countries will have completed the steps necessary to become WTO Members as of January 1, 1995.

Accession to the WTO

The WTO Agreement states that “any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in the Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO [emphasis added]” (Article XII). Decisions on accession will be taken by the Ministerial Conference, which shall approve the agreement on the terms of accession by a two-thirds majority of the members of the WTO.

Of note is the fact that the WTO Agreement permits any WTO member not to apply the agreement to any other member (Article XIII). In the case of accessions (as opposed to original members) the invocation of the nonapplication clause must be notified, before the WTO’s approval of the terms of accession. The purpose of the nonapplication clause is to ensure that no WTO member is forced into establishing trade relations with another member of the WTO, through a majority decision of the Ministerial Conference (a similar clause was contained in GATT 1947).

Procedural Steps19

The first step is the submission of a communication by the government, indicating the desire to accede to the WTO, to the Director-General of the Secretariat of the WTO, which circulates the communication to all member countries. The General Council considers the application and establishes a working party to examine the application for accession and to submit to the Council recommendations, which may include a draft decision and a draft Protocol of Accession. The draft protocol contains the terms of accession agreed by the applicant government and members of the working party, including the schedule of concessions on goods and the schedule of commitments on services.

The next step is the submission by the applicant government of a memorandum describing in detail its regulatory regime in all areas relevant to the WTO and providing relevant statistical data for circulation to all WTO members. WTO members may provide written requests for additional clarifications to the applicant government, which is invited to provide written replies. At a meeting of the working party, representatives from the applicant government and WTO members examine the memorandum on the regime, and the questions and answers, with a view to determining whether the applicant government is in a position to comply with the provisions of the Marrakesh Agreement Establishing the World Trade Organization.

Once the negotiations on goods (including agricultural products) and on services have been concluded, the report of the working party, the draft decision, and the Protocol of Accession are submitted to the General Council. Following the adoption of the report of the working party and the approval of the texts of the draft decision and Protocol of Accession, the decision is put to a vote and, if approved by a two-thirds majority, enters into force after acceptance by the applicant government.

The Preparatory Committee for the WTO has recommended to the WTO’s General Council that these procedural steps be adapted to the situation of countries with working parties under way for accession to GATT 1947. The recommendation is that the existing GATT 1947 accession working parties continue their work—as and when requests are made by the states or customs territories concerned to accede to the WTO Agreement—as working parties of the WTO, with standard terms of reference and under their respective current chairpersons.20 The purpose of this recommendation is to permit the countries concerned to build on the process already under way, rather than start the procedures anew. Among the 18 GATT 1947 accession working parties whose proceedings have not concluded are those of Algeria, Jordan, and Saudi Arabia.

The technical cooperation services of the WTO Secretariat are made available through the Technical Cooperation and Training Division to countries upon request, and trade policy officials may apply to take part in training courses held in Geneva.

1GATT Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, in Basic Instruments and Selected Documents, 26th Supplement (Geneva), p. 203.
2Dispute settlement procedures under the General Agreement are codified in GATT Articles XXII and XXIII; the 1966 Decision on Procedures under Article XXIII for disputes between claimant developing countries and respondent industrial countries (in Basic Instruments and Selected Documents, 14th Supplement, p. 18); the 1979 Understanding of Notification, Consultation, Dispute Settlement and Surveillance (in Basic Instruments and Selected Documents, 26th Supplement, p. 210); the 1982 Ministerial Decision on Dispute Settlement (in Basic Instruments and Selected Documents, 29th Supplement, p. 13); the 1984 Decision on Dispute Settlement (in Basic Instruments and Selected Documents, 31st Supplement, p. 9); and the 1989 Decision on Improvements to the GATT Dispute Settlement Rules and Procedures (in Basic Instruments and Selected Documents, 36th Supplement, p. 61). Each Tokyo Round agreement has codified its own dispute settlement rules, under the guidance of the Committee of the relevant agreement.
3For a summary of the interpretations of GATT obligations, see GATT, Analytical Index: Guide to GATT Law and Practice (Geneva, 1994).
4An “agreement” is defined as a restraint involving an importer government and an exporter government covering MFA products. See “Report of the Textiles Surveillance Body to the Textiles Committee, Addendum: Status of Restrictions and Arrangements Maintained by Participants on 14 October 1994,” COM.TEX/SB/1975/Add. 1 (Geneva: GATT).
5See Chapter 1, under “Signs of Strain in the System.”
6Agreements that do not form part of the single undertaking include those on government procurement, civil aircraft, and the dairy and bovine meat arrangements.
7Traditional monitoring activities under the GATT were based on notification requirements, and WTO members have reaffirmed this commitment and agreed to establish a central registry of notifications under the responsibility of the WTO Secretariat. A review of notification obligations and procedures will take place within two years of the entry into force of the WTO to assess whether further improvements are necessary.
8Including protocols and certifications relating to tariff concessions, protocols of accessions, waivers granted under Article XXV, and other decisions of the Contracting Parties of GATT 1947.
9Figures are affected by the fact that comparable data are available only for 27 of 93 developing economy participants. The 27 participants account for roughly 80 percent of the total merchandise imports of developing economy participants in the Uruguay Round.
10To facilitate the tariffication process, a “special treatment” clause allows a country to maintain import restrictions up to the end of a transition period under strictly defined conditions. In addition, certain countries have made special arrangements for imports of pork and alcoholic beverages.
11The United States, for example, applies an unbound specific duty of $0.0525 a barrel on crude petroleum testing under 25 degrees A.P.I. and an unbound specific duty of $0.105 a barrel on crude petroleum testing over 25 degrees A.P.I.
12To facilitate the tariffication process, a special treatment clause allows specific countries to maintain import restrictions under strictly defined conditions as set out in the agreement and the schedules of the countries concerned. Certain countries have made special arrangements for imports of pork and alcoholic beverages.
13In certain circumstances where subsidized exports have increased since the 1986–90 base period, 1991–92 may be used as the beginning point of reductions, although the end point remains that based on the 1986–90 base-period level.
14De minimis provisions are more generous in the case of products imported from developing countries.
15“Quota modulation” is a term used to signify the possibility of allocating quotas in a discriminatory manner—that is, a possibility to deviate from the nondiscriminatory quota allocation specified in Article XIII of GATT 1994.
16These include voluntary export restraints (VERs), orderly marketing arrangements (OMAs), or any other similar measures on the export or the import side. Each importing member of the WTO is permitted to keep one specific measure in force until the end of 1999, subject to the agreement of the exporting country in question, and subject to review and acceptance of this exception by the Committee on Safeguards.
17Least developed countries may request a further extension.
18Sixteen least developed countries are taking advantage of the additional year provided for the purpose of finalizing schedules of commitments on goods and services that ends on April 15, 1995. The finalization of the schedules of Qatar and the United Arab Emirates, respectively, which acceded to GATT 1947 in the course of 1994, has not been completed.
19Based on GATT practice (L/7317); see GATT, Analytical Index (Geneva, 1994).
20As of mid-December 1994, requests in this regard have been made by Ecuador, the Russian Federation, and Slovenia. A WTO working party was established to examine Croatia’s request for accession to the WTO in 1994.

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