The GATT and international

commercial policy, 1947-90

THE EARLY YEARS, 1947-60
Despire rhe diversiry of interesrs among rhe contracring parries ro GATT
and rhe variery of commercial policies rhey pursued, GATT achieved
considerable success in a number of areas during rhe 1950s. While rhe early
success recorded in rhe 1947 rariff-reducing negoriarions was nor again

repeared in rhe subsequent meerings ar Annecy (949), Torquay 0950-1),

and Geneva 0955-6), sorne progress continued ro be made and, by rhe
mid-1950s, a ner reducrion in U.S. duries of 50 per cent had been achieved
since 1934 by rariff concessions alone, rhe grearer parr of which had
occurred afrer 1945. Even more striking was rhe growrh of membership of
GATT, from rwenty-rhree signarories in 1947 ro over seventy in 1960,
comprising countries which accounted for over 80 per cenr of roral world
trade. Equal1y significant ar rhe rime was rhe GATT's conrriburion ro rhe
peaceful serrlement of commercial disputes. By providing a forum for
conciliarion and discussion GATT resolved, ofren rhrough rhe use of
arbirrarion or adjudicarion, dispures which mighr orherwise have caused
conrinuing bad feeling, reprisals, and even diplomaric breakdown.
Progress in dealing wirh quanrirarive trade resrricrions was much slower
rhan rhar wirh rariffs. This was parrly because rhe economic difficulries of
rhe lare 1940s and 1950s made ir imperarive rhar many countries rerain
rheir conrrols over rheir trade. Moreover, GATT's powers over quantirarive
restricrions were relarively weak, for ir could only consulr wirh members in
an endeavour ro persuade rhem ro reduce rheir restricrive measures. Despire
rhis limirarion, however, GATT's consrant review of rhe commercial
policies of individual countries and irs persisrent attemprs ro obrain a
relaxarion of trade restricrions musr have contributed somerhing ro rhe
general, if gradual, eliminarion of resrricrions rhar rook place in rhe lare
1950s. In addirion, GATT' s exisrence may have prevented rhe introduerion
of new preferential arrangements along rhe lines of rhose adopred in rhe
1920s. Lare in rhe 1950s, however, rhe growrh of regional trading blocs
under rhe exceprions ro rhe no-new-preference rule did much ro erode rhe
GATT's powers.
U,.." I allU ,",Vlllllltlll,;lal POIICY, .lO
The Advent of Regional Trading Blocs
A number of smal1 customs unions, France-Monaco, Italy-San Marino,
Switzerland-Liechtenstein, and Belgium-Luxembourg, emerged unbroken
fram World War n.
1
After the war, rhe trend towards economic and/or
political integration gathered pace. The first step had been taken with the
formation of Benelux in 1944, when Belgium, the Netherlands and
Luxembourg agreed to establish a tariff community with a
external tariff as a prelude ro complete economic integration in later years.
The Schuman Plan of 1950 tO set up a European Coal and Steel
Community (ECSC) was adopted by the Benelux countries, France, West
Germany, and Italy. Under a waiver of GATT's no-new-preferences rule,
the ECSC produced a gradual removal of duties on coal and steel, subsidies
and other restrictions and discriminarory devices between the member
countries, under the guidance of a supranational authority. The ECSC was
only a prelude ro bigger things to come. In 1955, discussions began on the
formation of a customs union embracing the members of the ECSC which
was to have far-reaching implications for the international economy as a
whole. The structure of the EC was final1y agreed upon in March 1957 and
incorporated in the Treaty of Rome, the provisions of which came into
operation in 1958 after recognition of the regional trading bloc was
established in GATT.
The aim of the EC, by establishing a common market and by
progressively harmonizing the economic policies of the member states, was
ro promote the development of economic activities in the region, increase
economic stability, and accelerate improvements in the living standards of
the population. Political unity formed a 10ng-term aim even if it was only
implied in the Treaty. Other features provided for the free movement of
people, services, and capital within the region, common agricultural and
transporr policies, and the setting up of a Social Fund and an Investment
Bank. The Treaty also provided for association of the EC with the
dependent overseas territories of the member states.
While the creation of permanent regional entities was an acceptable
exception ro the no-new-preferences rule at the time the General
Agreement was signed in 1947, no one expected such unions ro produce
major trading blocs of the size of the EC. In any case, it was considered
that when formed they would prove beneficial to countries outside the
union by improving the welfare of the parricipants and creating additional
opporrunities for trade. But with the establishment of large customs
unions, it was found necessary to consider not only their trade-creating
potentialities, but also the trade-diverring effects of such unions, that is,
the extent ro which the formation of a customs union will lead to a
diversion of rhe trade of one member country from third countries to
another member of the union. Moreover, whi1e the rest of the world would
benefit from the setting up of the customs union on1y if the creation of new
J
276 The post-1945 international economy
trade opponunltles exceeded the extent of trade diversion, the trade
creating aspects may also be perverse ro the extent that only a few external
countries could gain while the rest of the world did nor. The big danger
);
....
from such a large union as the EC is the great temptation for it ro become
inward-Iooking and that consequently any benefits ro be derived by external
countries are only accidental.
The Haberler Report
The general improvement in trading conditions between the Western
industrial nations evident in the second half of the 1950s led ro increasing
dissatisfaction among the primary-producing countries. They were inclined
ro look upon GATT as an institution designed largely ro allow commercial
policies which favoured the richest industrial contracting parties. Conse
quently, a panel of expens was appointed ro investigate and repon on the
working of the General Agreement since 1947. The Haberler Repon was
presented to GATT in 1958. lt emphasized two major points: that
agricultural protectionism in the industrial countries had minimized the
benefits that the traditional food-exponing countries could have expected ro
receive from their membership of GATT, and that many of the developing
countries had also been disadvantaged by the commercial and other policies
of the industrial nations.
THE GATT AND COMMERCIAL POLICY, 1960-90
After the Haberler Report
Out of the deliberations on the Haberler Repon carne the setting up of
three committees to consider funher the three areas of trade relations
stressed in the repon as requiring sorne action, namely, tariff negotiation
rounds, agricultural protectionism, and the specific trade problems of the
developing countries. The first of these committees was responsible for the
implementation in the 1960s of the Dillon and Kennedy Rounds of 1961
and 1963-7. The second committee, after investigating the agricultural
policies of all major trading countries, concluded that 'the extensive reson
ro non-tariff protection of agriculture had impaired or nullified tariff
concessions or other benefits which agricultural exponing countries expect
ro receive from the General Agreement'. The third GATT committee was
set up to consider the trade problems of the developing countries and was
successful in 1964 in achieving the incorporation of a new chapter in the
General Agreement allowing discriminaton in favour of the developing
countries. This paved the way for the establishment of the Generalized
System of Preferences (GSP) which was introduced by most industrial
nations in the 1970s, for example, by the EC in 1971 and the United
States in 1976.
GATI and commercial policy, 1947-90 277
UNCTAD
As we have already seen, a major source of grievance within GATT in the
1950s was the relatively poor expon performance of many primary
producing countries. Whereas sorne of the reasons for this State of affairs
were to be found in the domestic policies of the primary-producing
countries themselves, many of them nevertheless believed that the
industrial nations had used the exceptions in GATT to protect their own
relatively inefficient agricultural industries ro the detriment of the exports
of foreign primary producers. Furthermore, until the Kennedy round in the
mid-1960s, agricultural products did not enter into discussions on tariff
reductions. Rightly or wrongly, the less developed countries carne to look
upon GATT as a 'rich man's club' and, early in the 1960s, they turned to
the United Nations, the only forum in which they had considerable voting
strength, for an answer ro their trade problems. The result was the first
meeting of UNCTAD, the United Nations Conference on Trade and
Development, in Geneva in 1964.
UNCTAD became institutionalized in much the same way as GATT and
conferences have been held every three or four years since 1964. UNCTAD
membership includes most developing countries while developed nations
maintain observers at aH discussions. UNCTAD cannot force its
recommendations on the industrial countries but, even so, by highlighting
the inequities of the trade system and other aspects of international
economic relations which favour the economically powerful, it has often
influenced the richer nations into offering concessions which otherwise may
not have been made. In the 1970s it highlighted the caH for a 'new
international economic order' and for a 'North-South' debate on the
existing and mounting problems of the Third World. At Manila in 1979
(UNCTAD V) there was widespread support for the introduction of an
integrated commodities programme (ICP) and the establishment of a
Common Fund, with a view ro stabilizing primary product prices, thereby
eliminating sorne of the uncertainties surrounding the expon earnings of
many of the developing countries. Despite the effons of UNCTAD,
however, little progress has been made rowards solving sorne of the more
pressing economic problems currently confronting the Third World.
Discrimination in World Trade
From the early 1960s the undermining of one of the basic principies upon
which GATT had been founded-non-discrimination in trade and no new
preferences-was carried even funher than it had been in the 1950s with
the formation of the EC.
In terms of Western European integration, the original six members of
the EC were joined by United Kingdom, Ireland, and Denmark in 1973,
by Greece in 1981, and by Spain and Portugal in 1986. By then the
278 The post-1945 international economy
Community had become a very powerful' economic entity.
In 1960, as a counter ro the formation of the EC, the European Free
Trade Association (EFTA) was formed by Austria, Denmark, Norway,
Portugal, Sweden, Switzerland, and the United Kingdom. EFTA was a
much looser organization than the EC ro the extent that, while each
member country was committed to a reduction of its tariffs on the other
member countries' goods, each country could follow an independent policy
with regard ro its import duties on goods coming from other countries.
EFTA was weakened by the entry of the United Kingdom, Denmark,
Spain, and Portugal into the EC but strengthened by the free trade
agreement in non-agricultural goods arranged with the EC in 1972.
The example provided by the formation of the EC and EFTA paved the
way for the establishment of regional trading blocs in other parts of the
world. By the end of the 1960s, seventeen regional arrangements of varying
degrees of integration covering more than eighty contracting parties to the
GATT had been negotiated. Among these were the Latin American Free
Trade Area (LAFTA), finalized in 1961 by Argentina, Brazil, Chile,
Mexico, Paraguay, Peru, and Uruguay, and the Central American Common
Market (CACM), comprising Costa Rica, El Salvador, Guatemala,
Honduras, and Nicaragua, the aim of which was ro become an integrated
customs union by 1967. In Africa, two regional trading blocs were agreed
upon in 1959, one comprising the former French West African countries,
namely, Dahomey, Ivory Coast, Mali, Mauritania, Niger, Senegal, and
Upper Volta. The other was the Equatorial Cusroms Union, consisting of
Chad, Gabon, and the Central African Republic. Later, other preferential
arrangements were agreed ro by a number of country groupings, all of
which were of importance only within their own region and many of which
did not last for more than a decade. LAFTA existed until rowards the late
1960s and was then replaced by the Andean Pact of 1968 covering Bolivia,
Colombia, Chile, Ecuador, and Peru. By 1975 this organization was also in
difficulties. Moreover the CACM disintegrated in the 1970s after Honduras
lefr it.
At the instigation of France, the first Yaound Convention of the EC in
1963 granted association status ro the former French, Belgian, and Italian
colonies in Africa. Under this Convention, which was extended in 1969,
these newly-emerging African countries received preferential treatment for
their exports within the EC and, as well, a European Development Fund
was set up ro offer them financial aid. These arrangements received a hostile
reception from those other developing countries which were discriminated
against by the preferences granted. Subsequently, however, the adoption of
GSP by the EC in 1971 did much to reduce the degree of preferential
treatment accorded ro the former colonies. In 1975, the Yaound
Convention was superseded by the Lom Convention which extended the
preferential arrangements ro include the former colonies of Britain and
GAI I ano commerClal POIICY, l ~ / - l : : I U " ~
widened the area covered by including countries and colonies in Africa, the
Caribbean and the Pacific (ACP countries). Given rhat the degree of trade
preferences afforded under this agreement would be small, the major
benefit ro be derived by the countries in the ACP region from association
with EC arose out of the STABEX scheme under which these countries
were ro be compensated for any shortfall in their export earnings on several
commodities sold ro the EC. Such compensation is financed out of the
European Development Fund.
In addition ro these conventions, the EC negotiated preferential trade
treaties with numerous other countries, especially in the Mediterranean area
and in South America. In 1972, the preferential bilateral trade agreements
which had been concluded by the EC with individual Mediterranean
countries after 1968 were multilateralized for the region and a highly
preferential system was created. All these arrangements (including the free
entry of non-agricultural goods from EFTA members after 1972) show up
the weaknesses of the GATT, more particularly its inability ro prevent
further erosion of one of the basic principles upon which it was
founded-non-discrimination and no-new-preferences. They also illustrate
the fact that the EC has not accepted these basic principles even if it still
pays lip service ro GATT. By 1973 fewer than half a dozen countries were
confronted by the ECs most-favoured-nation (MFN) duties under these
arrangements.
While the EC has been a major offender in terms of discriminarory trade
practices during the last three decades, the stalwart of non-discriminarory
trade dealings, the United States, reacted in the 1980s ro the ECs
disregard of the GATT rules by introducing tariff preferences on a list of
commodities in favour of certain Caribbean countries and rook the first
steps rowards a free trade area with Israel. The possibility of similar
agreements with Canada and Mexico would be more far-reaching in terms
of their effects on world trade.
Agricultural Protectionism
There are two other areas in which world trade has been even more
disrorted by the actions of the developed countries. By far the most
damaging departure from the principles of GATT in the 1960s was the
introduction of the common agricultural policy (CAP) by the EC. The CAP
aimed at ensuring t"hat farmers in the Community would be able ro enjoy
incomes comparable ro those obtained in other domestic industries. This
was achieved through restrictions on the entry of foodstuffs from non
member countries, the use of support prices for agricultural products, and
the disposal of agricultural surpluses when necessary. To resteict importS, a
variable levy system was introduced and used in such a way that importS of
foodstuffs were priced higher than the same commodities produced by EC
280 The post-1945 international economy
farmers. The levy could chus be used as effeccively as quancicacive
rescriccions on agricultural imporcs. The pricing policy was subjecc co
annual review and as applied ro sorne commodicies ic led ro overproduccion
and che accumulacion of surpluses, for example, in sugar and butter. One
way of disposing of such surpluses was ro dump chem on world markecs,
financing such disposals ouc of an agricultural fund (che FEOGA) which
was fed by financial contribucions from che member governments.
Bricain's accession ro che EC in 1973 creaced almosc insuperable
difficulties for several countries chac had long-escablished markecs in Bricain
for a number of primary produccs. They were compelled ro racionalize cheir
efficient agricultural secrors and/or cultivace new markecs elsewhere in che
world. Ironically, chis search for new markecs was hampered by che ECs
and, from che mid-1980s, by che U.S. policy of dumping agricultural
i
surpluses in world markecs.
Non-Tariff Tracle Rescriccions
The second area of greac concern arose in che 1970s, when, for a number of
reasons, frequent and widespread reson ro non-cariff rescriccions on imporcs
by che induscrial countries occurred. The cypes of measures used were
varied in characcer buc orderly markecing arrangements (OMAs) and
voluntary expon rescraints (VERs) were che mosc common. The
effecciveness of Japan's penecracion of American and European markecs was
of major concern ro chose countries and was che inicial reason for such
rescriccions. Lacer, che cariff reduccions negociaced under che Kennedy
round, finalized early in che 1970s, were soon found ro benefic che newly
induscrializing countries (NICs), particularly in cexciles, cloching, and
foocwear, and sorne rescrictions on chese imports soon followed. Third,
under che GSP introduced in che early 1970s, cariff preferences were
excended co a wide range of exporcs from che developing countries but, ac
che same cime, ic became common co fix annual maxima co che quanticies
of che commodicies allowed into che countries offering such preferential
creacment. Finally, che worsening economic condicions which prevailed in
all industrial countries afcer 1973 led ro a general claim by domescic
producers for greacer proceccion againsc imports. As a result, despice che
inauguracion of che Tokyo round, in which sorne accention had ro be paid
ro non-cariff rescriccions, chis form of proceccion became even more
widespread.
Multilaceral Tracle Negociacions (MTNs) since 1960
Since 1960, four rounds of multilaceral trade negociacions (MTNs) have
been concluded although che fourth has been aborced. The Dillon round of
1961 achieved very littIe and ic became apparent chac che mechod of
GA llana eommereial pOliey, 1947-9U Ol
producc-by-producc negociacions had finally reached ics practical limics and
was nO longer useful in bringing abouc subscancial reduccions in che levels
of procection in che negociacing nacions. As a resulc, che Kennedy round
0964-7) was nocable because linear reduccions in cariffs on a wide variecy
of produccs were negociaced which achieved an average reduccion in
industrial cariffs of becween 36 and 39 per cenc. Ac che same cime, over 60
per cent of che reduccions were in excess of 50 per cene. Thus, sorne cariff
harmonizacion also occurred. The Kennedy round favoured che trade of che
industrial countries, alchough ic also beneficed some developing countries
ro che excenC chac che lowering of cariffs on manufaccured goods allowed che
rapid growch of manufaccured exporcs from NICs such as Brazil, Taiwan,
Souch Korea, Hong Kong, and Singapore. Although che cerms of
negociacion of che cariff round required chac sorne regard be paid co che
reduccion of agriculcural proceccion, licele progress was made, given che
atticude of che major participants in che negociacions (che EC and che
Uniced Scaces). A new Incernacional Grains Agreemenc was che only
agriculcural ouccome of che negociacions, and chis Agreement lasced only
chree years.
The chird round of MTNs since 1960 was che Tokyo round 0973-9).
For che firsc cime ic appeared chac, in addicion co che usual reduccions in
cariffs on manufactures, che negociarors were committed ro a consideracion
of ways of reducing che barriers co trade in agriculcural produccs and non
cariff barriers ro trade, as well as a general consideracion of che trade
problems of developing councries. While a number of facrors contribuced co
a delay in che commencemenc of che negociacions uncil 1977, che Trade
Negociacions Commiuee had by chen escablished chac discussions would
proceed along seven lines: on cariffs on industrial produccs; non-cariff
barriers ro crade; che sectoral approach, chac is, che cechnique of co
ordinaced reduccion or eliminacion of trade barriers wichin parcicular
producc groups; agriculcural produccs; cropical produccs; che adequacy of
che mulcilaceral safeguards syscem; and special differencial treacmenc for
developing councries.
The major negociacions occurred, as usual, becween che Uniced Scaces
and che EC. Despice che original intencions of che round, developing
councries and che ocher agriculcural exporters cook liule part in che
deliberacions. The ouccome included around 30 per cenC reduccions in
cariffs on industriaL produccs, including some cariff harmonizacion. The
reduccions were larger on finished goods chan on raw macerials or
incermediace produccs and small reduccions in cariffs occurred for cemperace
zone agriculcural commodicies on which non-cariff barriers remained
unchanged. On non-cariff barriers little progress was made. Acode on
subsidies and councervailing ducies was drawn up, and agreemenc on ocher
relacively minor aspeccs of trade which were of inceresc ro che EC and che
Uniced Scaces, such as governmenc procuremenc, cusroms valuacion,

282 The post-1945 international economy
technical trade barriers, and import licensing procedures, was also
achieved. Given the extent to which non-tariff barriers, in the forms of
OMAs and VERs, had been introduced particularly in Europe to counrer
competition from Japan and the NICs, the relatively minor agreements
reached highlighted the manner in which many of the fundamenral trade
problems which were supposed to receive the bulk of attention of the round
were side-stepped in the negotiations. Agricultural protectionism emerged
from the MTN virtually untouched. Scant regard was paid to the
excessively protectionist nature of the CAP or ro the dumping of surpluses
on the fragile world market, both of which had severely curtailed the
ability of moce efficient agricultural producing counrries to increase, or
even maintain, their foreign markets. Out of this section came
international dairy and bovine meat arrangements and a multilateral
agricultural framework, all of which were largely consultative. Finally,
several developed counrries granred tariff and non-tariff concessions co
developing counrries exporting specified tropical products, generally in the
form of improvements in the GSP which these developed counrries had
previously introduced.
";f
Japan, the NICs, and some developing countries desired the introduction
of acode of conduct to be followed by Countries inrroducing import
controls aimed at preserving orderly marketing of certain products in their
domestic markets, but the EC insisted on maintaining the right to
implement such controls on a unilateral basis when they became necessary.
Given the rhetoric with which the Tokyo round was introduced, the
round was a failure. Little was achieved of direct benefit ro contracring
parties outside the industrial world and much that was achieved was
peripheral to the major issues upon which the round was justified. Largely
the industrial counrries, and especially the EC, set out to protect their
positions, but the round was necessary precisely because che policies then
being followed by the EC and other Countries were contrary ro the
philosophy underpinning GATT.
Despite (or because of) the failure of the Tokyo round, a new set of
MTNs was set in motion in 1986--the Uruguay round. With a
programme similar ro that of its predecessor, but including trade in
services, negotiations were expected ro last for four years. This time, the
developing counrries and the primary exporting nations were determined
that the results will not consist largely of bilateral trade-offs between the
EC and the United States.
Commodity Agreemenrs
Widely fluctuating export prices of primary products have remained a
major problem foc those developing counrries with a narrow primary
I
I
product export base or those for whom these exports have constituted a I
I
I
I
,
I
J
GATI and commercial policy, 1947-90 283
large part of their national incomes. After World War 11, several attempts
were made ro ensure orderly marketing of these primary products and they
resulted in international agreements covering such commodities as wheat,
sugar, tin, coffee, and cocoa. The record of these commodity agreements
has not been good. Few have lasted very long and those that have lasted
produced only marginal improvements for the exporters of those
commodities. This failure demonstrates only roo well the tremendous
difficulties surrounding any attempt to draw up such agreements, each of
which would have ro be satisfacrory ro the many exporting and importing
counrries covered and each of which countries would naturally be concerned
with the protection of its own interests.
The increased instability in the world economy during the 1970s led ro
further attempts ro deal with the problem of fluctuating export prices of
primary produces. As part of the demand for a 'new international economic
order', UNCTAD pressed foc an integrated programme of commodity
control agreements (lPC) covering a group of eighteen commodities. To aid
the financing of the buffer stocks of commodities that these international
commodity agreements would give rise ro, a Common Fund of $6,000m.
was advocated. Eventually in 1979, such a fund was set up, but its role was
less ambitious than that intended by UNCTAD foc its resources, made up
of government contributions, were limited ro $470m. Even if several
international commodity agreements were negotiated successfully, the size
of the Common Fund would place asevere limit on their effectiveness.
CONCLUSION
Immediately after World War 11, a concerted effort was made ro set up a
multilateral trade system through the elimination of controls over trade and
commerce and a reduction in the amount of protection afforded ro domestic
industries by member countries of GATT. The most-favoured-nation
principIe and the no-new-preferences rule were intended to prevail in the
tariff field. AIl discriminatocy devices were ro be scorned by participants in
Western trade. By 1960 the situation was, in practice, almost the complete
reverse. As a result of the escape clauses in GATT and the inclusion of what
was considered at the time ro be a relatively minoc exception ro the general
rules governing trade liberalization, the international economy was heading
towards regionalization of the world economy to such an extent that,
within each regional free trade area, the most-favoured-nation principIe and
the no-new-preferences rule were side-stepped as individual member
countries within these free trade regions discriminated in favour of other
member countries and against outsiders.
Since 1960 the international economic power which has come with the
economic union of several of the major trading nations of the world has led
to many of the original rules of GATT becoming inoperative and, despite
284 The post-1945 international economy
the limited success of the Tokyo round, the failure of GATT negotiators to
come ro grips with the major inequities which govern world trade at the
present time demonstrates the fact that the record of GATI compared with
its original basic objectives is one of failure. The major problems
confronring GATT arise out of the increasingly protectionist policies
pursued by the major trading counrries during the past three decades which
have been adhered ro with total disregard for the principIes of multilateral
trade upon which GATI was founded.
That GATT has been partialIy successful is demonstrated by the degree
ro which tariffs on manufactured impores have been reduced over the years
by the advanced industrial counrries, and by the ability of GATIto
recognize the special trade problems of the developing counrries through
the relaxation of the no-new-preferences rule as it affects these counrries.
But this preferential treatmenr of the trade of deve!oping counrries has not
yet gone far enough while, against its advanrages, must be set the impact
of the many non-tariff barriers erected by the industrial counrries from the
early 1970s on the impores of manufactures from the NICs and Japan. Such
barriers, the justification of which goes beyond the shore-term requirements
of counrries with high unemploymenr, demonstrate the unwillingness of
the industrial counrries ro accept the changes in the world economy which
have become more evidenr since the early 1970s and which will become
even more apparenr in the years to come. Given the presenr stalemate
< : ~
within GATT, which has been amply demonstrated by the inflexibility of '(
the attitudes of the industrial counrries with respeet ro change during the
..~
Tokyo round, ir is difficult to envisage any major advances being made
during any extension of the present Uruguay round. While it is true that
the GATI system worked reasonably well for the industrial countries up ro
the early 1970s, once the rate of expansion of world trade slowed down in
the 1970s, the richer nations tended ro consider the usefulness of the
institution as having declined. What has been completely forgotten are the
reasons for the establishmenr of the non-discriminatory, no quantitative
restrictions system of trade in the 1940s and how desirable for the world
economy as a whole is a returo to those principIes.
NOTES
A customs union involves rhe economic inregrarion of a number of counrries in such a
way as ca produce free trade among members of the union and a common external rariff
levied againsr aH non-members; a free trade area differs from a cusroms union in rhar
member narions foHow independenr rariff policies wirh respecr ca orher countries.
SELECTED REFERENCES
Davenporr, M., Trade Polity, ProleclionJm and Ihe Third World (London, 1986).
Golr, S., Developing Counlries in Ihe GATT Syslem (London, 1978).
GAl I ano commerClal pOllcy, 1947-9U
Langhammer, R. J., anJ Sapir, A" Ea!t/olllic llllpaet ofGeneraliud Tariff Prefm:nces (London,
1987).
MacBean, A. l., ami SnowJen, P. N., 11llemalirmallnstilll/irms in Trade and Finana (London,
198\).
Pomfrer, F., Uneqllal Trade: Ihe Econolllics of Discrilllinalory lnlernational Trade Polira (Oxford,
1988).
Trade Policy Research Centre, Global Slralexy or GroU'lh (London, 1981).
oo
~