The most important general trade agreement is fairly simply referred to as a general agreement on tariffs and trade (GATT). The GATT was signed in October 1947 to liberalize trade, create a more liberal trade agreement management organization and establish a trade dispute resolution mechanism. The GATT organisation is small and is located in Geneva. More than 110 nations signed the general agreement, originally signed by 24 nations, including the United States. The role of GATT as an organization has been largely replaced by the World Trade Organization, which I refer to later in this section. Despite calls for protectionism from those who will lose because of free trade, the world has clearly liberalized trade policy, removed trade barriers and formed regional trading blocs. As a result, international trade is freer than ever. We can all thank economists for that. They are undoubtedly the most stable, strong and clear voices in favour of free trade. The main free trade zones are the European Union (EU), the North American Free Trade Agreement (NAFTA) and the Association of South Asian Nations (ASEAN). Trade agreements govern international trade between two or more nations. An agreement may include all imports and exports, certain product categories or a single category.
The United States currently participates in some 320 trade agreements with different nations. (These are listed in www.tcc.mac.doc.gov) However, several general trade agreements have largely marked trade policy. Since the signing of the GATT, several «roundtables» have been held with a view to trade liberalization. The most important of these were the kennedy rounds, which eventually led to a one-third reduction in tariffs and, more recently, to Uruguay`s cycles. Uruguay`s cycles have focused on general barriers to trade and relatively new issues of intellectual property rights, fishing practices and the environment. From time to time, you will hear about fast track trade laws, in which Congress would give the president the power to negotiate trade agreements. This law has not been passed and remains controversial. U.S. tariffs are at their lowest in history.
Before the Second World War, they were up to 40% for some imports. Today, customs revenues account for less than 5% of the volume of imports and the dollar, and many imports are exempt from tariffs and quotas. Non-tariff barriers have also been largely eliminated, but not completely. That does not mean that everything is rosy in the world of foreign trade, nor does it mean that the United States is still playing fairly in the global marketplace. U.S. agricultural subsidies and textile tariffs, for example, impede imports of food, wipes and clothing from poor countries to protect these domestic industries. Nevertheless, the United States and the world at large should continue on the path of freer international trade. Proponents of the legislation argue that the current method of negotiating trade agreements, which requires congressional approval, is too slow and cumbersome for today`s world. Opponents point out that trade agreements are treaties with other nations and that the Constitution will give Congress the power to conclude those agreements.
They also point out that fast track legislation would limit public debate on trade policy. This debate is, of course, one of the reasons why the current method is slow and tedious. An important trend over the past 25 years has been the creation and growth of free trade zones between nations that agree on the formation of regional trading blocs. Agreements that create free trade zones all have the same objectives: trade liberalization, promoting economic growth and equal market access between Member States. In addition, the World Trade Organization (WTO) is a Geneva-based global organization that deals with trade between nations.