The subject of world trade and its evolution

Trade-policy reviews

The WTO also seeks to increase awareness of the extent and effects of trade-distorting policies, a goal that it accomplishes through annual notification requirements and through a policy-review mechanism. Notices of all changes in members’ trade and trade-related policies must be published and made accessible to their trading partners. For many developing countries and countries whose economies were formerly centrally planned, this requirement was a major step toward more transparent governance. The WTO reviews the trade policies of the world’s four largest traders (the European Union, the United States, Japan, and China) once every two years, the policies of the 16 next largest traders once every four years, and the policies of all other traders once every six or more years. After extensive consultations with the member country under review, the WTO Secretariat publishes its review together with a companion report by the country’s government. The process thus monitors the extent to which members are meeting their commitments and provides information on newly opened markets. It also provides a firmer basis for subsequent trade negotiations and the resolution of trade disputes.

Assessment

The pace of international economic integration via the GATT and WTO rounds of multilateral trade negotiations has been slower and less comprehensive than some members would prefer. Some have suggested that there should be additional integration among subgroups of (often neighbouring) member economies—e.g., those party to the European Union, the North American Free Trade Agreement (superseded by the United States-Mexico-Canada Agreement, signed in 2018) and the Asia-Pacific Economic Cooperation—for political, military, or other reasons. Notwithstanding the most-favoured-nation clauses in the agreements establishing the WTO, the organization does allow such preferential integration under certain conditions. Even though many such integration agreements arguably do not involve “substantially all trade”—the WTO’s main condition—there has been little conflict over the formation of free-trade areas and customs unions. The most common omissions from such agreements are politically sensitive sectors such as agriculture.
Beginning in the late 1990s, the WTO was the target of fierce criticism. Opponents of economic globalization (see antiglobalization), and in particular those opposed to the growing power of multinational corporations, argued that the WTO infringes upon national sovereignty and promotes the interests of large corporations at the expense of smaller local firms struggling to cope with import competition. Environmental and labour groups (especially those from wealthier countries) have claimed that trade liberalization leads to environmental damage and harms the interests of low-skilled unionized workers. Protests by these and other groups at WTO ministerial meetings—such as the 1999 demonstrations in Seattle, Washington, U.S., which involved approximately 50,000 people—became larger and more frequent, in part because the development of the Internet and social media made large-scale organizing and collective action easier. In response to such criticism, supporters of the WTO claimed that regulating trade is not an efficient way to protect the environment and labour rights. Meanwhile, some WTO members, especially developing countries, resisted attempts to adopt rules that would allow for sanctions against countries that failed to meet strict environmental and labour standards, arguing that they would amount to veiled protectionism. Despite these criticisms, however, WTO admission remained attractive for nonmembers, as evidenced by the increase in the number of members after 1995. Most significantly, China entered the WTO in 2001 after years of accession negotiations. The conditions for Chinese membership were in some ways more restrictive than those for developing countries, reflecting the concerns of some WTO members that the admission of such a large and still somewhat planned economy might have an overall negative effect on free trade.
General Agreement on Tariffs and Trade (GATT), set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariff duties among the contracting nations. When GATT was concluded by 23 countries at Geneva, in 1947 (to take effect on Jan. 1, 1948), it was considered an interim arrangement pending the formation of a United Nations agency to supersede it. When such an agency failed to emerge, GATT was amplified and further enlarged at several succeeding negotiations. It subsequently proved to be the most effective instrument of world trade liberalization, playing a major role in the massive expansion of world trade in the second half of the 20th century. By the time GATT was replaced by the World Trade Organization (WTO) in 1995, 125 nations were signatories to its agreements, which had become a code of conduct governing 90 percent of world trade.
GATT’s most important principle was that of trade without discrimination, in which each member nation opened its markets equally to every other. As embodied in unconditional most-favoured nation clauses, this meant that once a country and its largest trading partners had agreed to reduce a tariff, that tariff cut was automatically extended to every other GATT member. GATT included a long schedule of specific tariff concessions for each contracting nation, representing tariff rates that each country had agreed to extend to others. Another fundamental principle was that of protection through tariffs rather than through import quotas or other quantitative trade restrictions; GATT systematically sought to eliminate the latter. Other general rules included uniform customs regulations and the obligation of each contracting nation to negotiate for tariff cuts upon the request of another. An escape clause allowed contracting countries to alter agreements if their domestic producers suffered excessive losses as a result of trade concessions.
GATT’s normal business involved negotiations on specific trade problems affecting particular commodities or trading nations, but major multilateral trade conferences were held periodically to work out tariff reductions and other issues. Seven such “rounds” were held from 1947 to 1993, starting with those held at Geneva in 1947 (concurrent with the signing of the general agreement); at Annecy, France, in 1949; at Torquay, Eng., in 1951; and at Geneva in 1956 and again in 1960–62. The most important rounds were the so-called Kennedy Round (1964–67), the Tokyo Round (1973–79), and the Uruguay Round (1986–94), all held at Geneva. These agreements succeeded in reducing average tariffs on the world’s industrial goods from 40 percent of their market value in 1947 to less than 5 percent in 1993.
The Uruguay Round negotiated the most ambitious set of trade-liberalization agreements in GATT’s history. The worldwide trade treaty adopted at the round’s end slashed tariffs on industrial goods by an average of 40 percent, reduced agricultural subsidies, and included groundbreaking new agreements on trade in services. The treaty also created a new and stronger global organization, the WTO, to monitor and regulate international trade. GATT went out of existence with the formal conclusion of the Uruguay Round on April 15, 1994. Its principles and the many trade agreements reached under its auspices were adopted by the WTO.
Seattle WTO protests of 1999, in full Seattle World Trade Organization protests of 1999, also called Battle of Seattle, a series of marches, direct actions, and protests carried out from November 28 through December 3, 1999, that disrupted the World Trade Organization (WTO) Ministerial Conference in Seattle, Washington. Comprising a broad and diffuse coalition of the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO) and other labour unions, student groups, nongovernmental organizations (NGOs), media activists, international farm and industrial workers, anarchists, and others, the Seattle WTO protests are often viewed as the inauguration of the antiglobalization movement.
The Seattle WTO protests were some of the first major international mobilizations to be coordinated via the Internet. The protests were reported online with streaming audio and video clips by the Seattle Independent Media Center. While 400,000 people took part in a virtual sit-in of the WTO Web site organized by the Electrohippies Collective, more than 40,000 protesters (some estimates were as high as 60,000) were in Seattle to oppose everything from specific WTO policies to free trade and the human rights failures of globalization. Throughout the week, NGOs also sponsored debates, lectures, and teach-ins.
By the morning of November 30 (dubbed N30), an estimated 10,000 protesters surrounded the Paramount Theatre and Convention Center, where many WTO functions were being held. Through a variety of tactics, such as street theatre, sit-ins, chaining themselves together, and locking themselves to metal pipes in strategic locations, the protesters prevented the opening ceremony from taking place. In response to this civil disobedience, the police used pepper spray, tear gas, and rubber bullets in their efforts to disperse the crowd; some protesters responded in kind by throwing sticks and water bottles. At the same time, the permitted AFL-CIO People’s Rally and March of more than 25,000 activists began at Memorial Stadium. As the march gradually moved downtown toward the Convention Center, a few hundred anarchists used targeted “black bloc” property-destruction tactics against Starbucks, Nike, Nordstrom, and other stores, and a few protesters burned trash cans and broke store windows. By midday Seattle’s central business district was clogged with marchers and other protesters, and consequently several WTO events were cancelled. The police ran out of riot-control chemicals, and Mayor Paul Schell, looking to quell the massive protests in anticipation of President Bill Clinton’s arrival the following day, declared a curfew for 7 PM to 7 AM in the area.
The following day, December 1, saw the illegalization of gas masks for the protestors and the creation of a 50-block “no protest zone” in the central business district. At the mayor’s request, the Seattle police were joined by members of the Washington National Guard and the U.S. military. More mass dissension and acts of civil disobedience, some vandalism, and curfew violations resulted in reprisals by the police forces and the eventual arrest of more than 500 people on December 1 alone. On December 2 and 3, thousands of demonstrators staged sit-ins outside the Seattle Police Department to protest what was seen by many as the department’s brutal tactics against peaceful protesters. Finally, December 3 ended with U.S. Trade Representative Charlene Barshefsky and WTO Director-General Mike Moore announcing the suspension of the conference in response to both the street actions and disagreements between the various delegations.
Seattle was left with millions of dollars in property damage and lawsuits by protesters arguing civil rights violations. While many of the affiliations formed by divergent political groups dissolved within the next few years, the Seattle WTO protests did jump-start a series of international antiglobalization protests and helped progressive movements realize the power of the Internet for mobilization and coalition building.

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  International trade is the lifeblood of the world economy, but is subject to constant change from economic, political and environmental forces.
  
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  Emerging economies have seen their share of total global trade rocket in recent years.
  
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  China, for instance, is now responsible for 15% of all world exports.
  
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  Unfinished goods, components and services account for 70% of all trade.
  
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  While trade in services accounts for two-thirds of global GDP, COVID-19 has had a devastating impact on trade patterns.
  

International trade is the lifeblood of the world economy, providing the goods and services that are traded across borders to bring wealth and prosperity to nations.
But how exactly does it work? The Organization for Economic Cooperation and Development (OECD) has attempted to unpack it all in the following three charts.