Which Statements Accurately Describes the General Agreement on Tariffs and Trade

(E) GATT member States shall endeavour to settle their trade disputes unilaterally. D) U.S. government imposes trade ban on Libya due to rampant terrorism Removing trade barriers is one of the most obvious ways to promote trade. The barriers affected include tariffs (or duties) and measures such as import bans or quotas that selectively restrict quantities. From time to time, other issues such as bureaucracy and exchange rate policy were also discussed. Countries that follow the neo-mercantilist model have also generally promoted education and high domestic savings to finance their growing export industries. For example, Japan`s savings rate was often above 20% of GDP and is now approaching 40% of China`s GDP. (In contrast, the U.S. savings rate has only been about 2% over the past decade, and has even been negative in a few years.) What has caused exports to grow faster than production is that firms have moved from a national orientation to multinational corporations, and now many have moved to global firms.

The first six rounds of GATT trade negotiations had reduced developed countries` tariffs on industrial products from an average of 40 percent after World War II to less than half that level at the end of the Kennedy round in 1967. In addition, international communications and transport have improved enormously (the first commercial aircraft crossed the Atlantic in 1958 and the first satellite for commercial telecommunications was launched in 1965). Economic theory based on Ricardo`s concept of comparative advantage dominates current thinking in the West and formed the intellectual basis for the formation of the GATT/WTO. The doctrine of mercantilism, which dominated thought until the end of the eighteenth century, is today generally rejected by Western economists. [16] A good source of trade data and an explanation of the data systems used is the Census Bureau`s Foreign Trade Statistics website, www.census.gov/eos/www/naics/. At the end of the Uruguay Round, developing countries were ready to assume most of the commitments required of developed countries. But the agreements have given them transition periods to adapt to WTO rules that are more unfamiliar and perhaps difficult, especially for the poorest and least developed countries. A ministerial decision adopted at the end of the round stipulates that the wealthiest countries should accelerate the implementation of market access obligations for goods exported by least developed countries and seek increased technical assistance from them. More recently, developed countries have begun to allow duty-free and quota-free imports for almost all products from least developed countries. In all of this, the WTO and its members are still undergoing a learning process.

The current Doha Development Agenda also reflects the concern of developing countries about the difficulties they face in implementing the Uruguay Round agreements. 2. National treatment: Treat foreigners and nationals equally Goods imported and produced in the country should be treated equally at least after the entry of foreign goods into the market. The same should apply to foreign and domestic services, as well as to foreign and local trademarks, copyrights and patents. This principle of national treatment (which accords others the same treatment as their own nationals) is also found in the three main WTO agreements (Article 3 of the GATT, Article 17 of the GATS and Article 3 of the TRIPS Agreement), although the principle is applied somewhat differently in each of these agreements. Geza Feketukuty, the main US negotiator for services in the Uruguay Round, gives a wonderful anecdote about the first efforts to start negotiations on trade in services: ”The Swiss delegate. rejected trade in services, stressing how impossible it was for him to have his hair cut by a hairdresser in another country. The Chair of the Committee.. replied that all women in Germany had benefited enormously from French hairdressing exports, and she was confident that the delegate`s wife would confirm that this was also the case in Switzerland.

[23] The GATT was created to establish rules to end or restrict the most costly and undesirable features of the pre-war protectionist period, namely quantitative barriers to trade such as trade controls and quotas. The agreement also provided for a system for settling trade disputes between nations, and the framework allowed for a series of multilateral negotiations on the elimination of tariff barriers. Gatt was considered a significant success in the post-war years. The WTO system contributes to development. On the other hand, developing countries need the flexibility in time they need to implement the agreements on the system. And the agreements themselves inherit the old GATT provisions, which allow for special aid and trade concessions for developing countries. While removing barriers to trade is generally a step towards free trade, there are situations where lowering a tariff may actually increase the effective level of protection for a domestic industry. Jacob Viner gives an example: ”Suppose there are import duties on wool and wool fabric, but despite the tax, no wool is made at home. The abolition of the obligation on wool with unchanged taxation of wool fabric leads to increased protection for the fabric industry, while it has no importance for wool breeding.

[11] Thirty-one years after the publication of The Wealth of Nations, David Ricardo introduced an extremely important change in theory in his Work on the Principles of Political Economy and Taxation, published in 1817. [3] Ricardo noted that trade between nations will take place even if a country has an absolute advantage in the production of all traded products. Yi notes that tariff reductions have a much greater impact on these global supply chains than on traditional trade. To take the example of the lawsuit, suppose that China, Bangladesh and the United States have each reduced their tariffs by 1% and imported fabrics and buttons account for half the cost of the chinese-made suit; then, the cost of manufacturing the suit in China will be reduced by 0.5%. Coupled with the 1% of the United States The reduction in tariffs would reduce costs for the American consumer by 1.5%. If the lawsuit had been produced entirely in China, the cost to the consumer would have been reduced by reducing U.S. tariffs or by just 1%. Multilateral trade liberalization, in which all countries reduce their trade barriers in parallel, promotes trade in the best possible way on the basis of comparative advantages.

However, countries can abuse the system by adopting a policy of the aggressiveness of its neighbor. This means that for many products, the traditional concept of ”country of origin” no longer applies, as many products have many countries of origin. This, in turn, means that standard trade statistics have limitations on their usefulness in understanding what is really happening in global trade. [22] It influences how countries should approach economic development, as it means that developing countries must be part of these global supply chains in order to increase the added value of parts and materials made available to these supply chains. And this has an impact on how companies perceive themselves – a company that sells worldwide and buys its parts and materials worldwide sees itself as a ”global” company rather than a ”national” company. The objective of removing trade barriers is, of course, to raise the level of trade, which should improve economic well-being. Economists often measure economic well-being by the share of total production of goods and services (i.e., gross domestic product, GDP) that the country produces on average per person. GDP is the best measure of economic well-being, but it presents significant conceptual challenges. As Joseph Stiglitz notes, measuring GDP ”cannot capture some of the factors that change people`s lives and contribute to their happiness, such as security, leisure, income distribution, and a clean environment — including the types of factors that growth itself must be sustainable.” [10] Moreover, GDP does not distinguish between ”good growth” and ”bad growth”; For example, if a company deposits waste into a river as a by-product of its production, the production and subsequent cleaning of the river contributes to the measurement of GDP.