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  • Print publication year: 2006
  • Online publication date: January 2010

Chapter 9 - Trade and Environment

Summary

WORLD TRADE INSTITUTIONS

The free movement of goods and services among states has been the exception rather than the norm in international trade. Countries have regulated international trade through a number of tariff and nontariff barriers. Every country has enacted its share of tariff and nontariff rules that put restrictions on foreign imports, thereby making foreign products more expensive than domestic products. These rules have acted as a barrier to international trade and have limited the choices available to the ultimate consumer.

Ideas of liberalism that free trade should be pursued for the benefit of the ultimate consumer, through the gradual elimination of tariff and nontariff barriers, launched the negotiations in 1946 for the development of an International Trade Organization. Eventually, countries agreed to adopt a milder version of a General Agreement on Tariffs and Trade (GATT). GATT acted as a legal agreement/quasi-legal institution for the regulation of international trade with the ultimate goal of bringing down the barriers to trade.

Since its inception in 1946, GATT has gone through several rounds of tariff reductions. In 1994, after seven years of negotiations, the World Trade Organization (WTO) emerged. The WTO manages a legal apparatus that includes the provisions of GATT as well as a General Agreement on Trade in Services (GATS), an Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), an Agreement on Sanitary and Phytosanitary Measures (SPS), and an Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).