2.3 THE GATT ROUNDS
2.3.6 The Uruguay Round (1986–94)
32 Despite these remarkable breakthroughs in the elimination and reduction of trade barriers, the international economic community was faced with retarded economic growth, rapid inflation and high unemployment (stagflation) amongst other economic impediments.191 This resulted in most of the CPs including the US resorting to protectionist measures like the voluntary export restraints (VERs).192 These measures were discriminating quantitative measures that circumvented the Tokyo Round disciplines due to their voluntary nature.193 They were only banned when the Uruguay Round agreements were signed in terms of Article 11(1) (b) of the Agreement on Safeguards.194
33 the formulation of new rules for the world trading system. Developing countries also made important market access offers in the ‘conventional area of reducing tariff protection on manufactures trade and in new areas’. The new areas in respect of which important market offers were made by developing countries included, inter alia, trade in services and trade in agricultural products.204
Bhala R also provides another reason as to why the Uruguay Round was critically needed in the realm of international trade around the 1980s. She argues that amongst the most challenging problems faced by the world trading community after the Tokyo Round were substantive market access issues in key economic sectors.205 She further points out that the Tokyo Round had failed to deal with certain sectors adequately or at all. This was in respect to providing a framework for market liberalization.206 Other problems areas that necessitated the establishment of the Uruguay Round were ‘the burgeoning of trade in services and barriers to such trade remained wholly outside the GATT framework’ and a vast number of CPs were overly protecting their agricultural sectors through tariffs, NTBs and subsidies.207 In light of these problems it can be noted that ‘a permanent multilateral infrastructure was essential in order to promote trade liberalization and deal with the expanding scope of international trade and policy’.208 In the words of Bhala R, it was necessary to ‘resurrect the ITO, ultimately under a different name; the WTO’.209
The strongest proponent for the formation of the Uruguay Round was the United States, supported primarily by the Japanese and the economies of the Pacific Basin.210 A possible explanation provided for such a keen interest by the US in the Round, is that the Round was globally competitive and in some instances dominant in services, intellectual property (IP), industries and agriculture.211 A round that produced significant market access for the American economy in these sectors would be openly welcomed by the US.212 Despite its popularity with the US and other Pacific Basin countries, the Round was also subject to
204Ibid, 5.
205 Bhala (note 92 above) 193
206 Ibid.
207 Ibid.
208 Ibid.
209 Ibid.
210 Gilpin (see note170 above) 196
211 See note 205 above
212 Ibid.
34 antagonism by LDCs since it was not consonant with the LDCs’ interests.213 Gilpin also asserts that some members of the European Community opposed it on the same grounds as those of LDCs.214
As was highlighted earlier, governments used the GATT/WTO process to ‘develop multilateral rules for other trade-related areas’.215 In this respect during the UR, governments created new multilateral rules in three main areas. Firstly, governments created multilateral rules to protect intellectual property (IP).216 In negotiating Trade-Related Intellectual Property Rights (TRIPs), ‘governments created multilateral rules that would oblige those countries that were not currently enforcing intellectual property rights to do so’.217 Secondly, international trade in services was brought into the multilateral regime as part of the commitment to liberalize trade.218
Hoekman B and Kostecki M point out that during the 1980s and 1990s international trade in services grew more rapidly than trade in manufactured goods.219 However, regardless of this reality and the importance of service sector activities, there were no rules to govern and regulate international trade in services.220 The General Agreement on Trade in Services (GATS) provided a framework for a limited amount of liberalization and for negotiations aimed at further liberalization.221 Finally, governments created a set of rules governing policies toward the foreign direct investments made by multinational corporations in the form of Trade-Related Investment Measures (TRIMs).222 These rules were designed to reduce governments’ abilities to impose import or export requirements on multinational corporations (MNCs) operating in their countries.223
213 Bhala (note 92 above) 193- LDCs were of the opinion that the Round had a bias for developed countries interests and paid insufficient attention to the interests of LDCs.
214 Gilpin (note170 above) 199
215 Oatley (note 49 above)
216 RP Michael Knowledge Diplomacy Global Competition and the Politics of Intellectual Property (1998) 12
217 Oatley (note 49 above) - In terms of Article 1 (1) of the TRIPS Agreement Members were obliged to ‘give effect to the provisions of the Agreement’. The provision in question further stated that ‘Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice’.
218 Ibid.
219 B Hoekman & M Kostecki The Political Economy of the World Trading System: from GATT to WTO (1995) 127 220 Oatley (note 49 above)
221 Hoekman & Kostecki (note 219 above) 141
222 Oatley (note 49 above)
223 Ibid.
35 In its infancy stages the Uruguay Round, in relation to tariff negotiations, used a combined approach with aspects of ‘request and offer’ and a general tariff reduction target of 30% on average.224 As part of the GATT’s commitment to address the needs of developing countries, an average 36% reduction was agreed upon for developed countries in respect of agricultural goods.225 As highlighted earlier by the end of the Uruguay Round the notion of a ‘single undertaking’ had become established.226 Under this notion ‘virtually every item of the negotiation is part of a whole and indivisible package and cannot be agreed separately’.227 It should be noted that the Doha Declaration reasserts the single undertaking nature of the negotiation.228 It is in respect of the above that Blouin C asserts that the UR was the first of its kind in terms of developing country participation. Developing countries were generally not very active in the GATT. However, with the UR all members had to be signatories to all the agreements based on the single undertaking method.229
A lot of merit has been awarded to the Uruguay Round in respect of trade liberalisation. For instance the commitment to market access received more attention under the Uruguay Round which produced the first multilateral agreement namely the Agreement on Agriculture, dedicated to agricultural trade.230 Kumar argues that the ‘Uruguay Round brought some significant institutional changes, which have resulted in relatively better governance of the world trading system under the aegis of the WTO’.231 Furthermore, this Round also advanced the integration of the world economy, especially the integration of developing countries into the MTS. Moreover, it can be noted that the Round contributed to the ‘liberalization of developing countries’ own trade regimes and improvements in the conditions affecting access to the major markets for their export products’.232
It is evident from the discussion of the Rounds including the Uruguay Round that the issue of agricultural liberalisation was very problematic. In support of this Gilpin asserts that ‘the problem of world trade in agriculture almost defies solution’.233
224 Love & Lattimore (see note 82 above) 83
225 Ibid.
226 Ibid.
227 Ibid.
228 Ibid.
229 Blouin (note 154 above)
230 WTO (note 14 above) 23 ACCESSED ON 27 MARCH 2014
231 Kumar (note 200 above)
232 Ibid.
233 Gilpin ( note 170 above) 199
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