The General Agreement on Tariffs and Trade (GATT) came into being in 1947. Along with the International Monetary Fund and the World Bank it was one of the institutions set up in the post-war period to help regulate the international economy and prevent a recurrence of the disastrous protectionist policies undertaken between the two World Wars. GATT was charged with overseeing international trade in goods and, in particular, the liberalisation of this trade by means of a negotiated reduction in tariff barriers. The scope of the GATT was, therefore, somewhat limited initially, but the conclusion of the Uruguay Round negotiations enlarged its field of activities and placed them under the auspices of the World Trade Organisation (WTO). The Member States of the EC were the contracting parties to the GATT, but, because of the common commercial policy, they participated as "the European Community" in the work of GATT and now participate as such in the WTO, that superseded the GATT since 1995. The Commission is the single negotiator and spokesman of the European Community/Union in WTO [see section 4.1.2]. The EC/EU as such is signatory to a number of international GATT agreements.
The EC Member States and other industrial countries made major tariff concessions - particularly in favour of the developing countries - during the successive GATT negotiating rounds between 1960 and 1979 under the aegis of the General Agreement on Tariffs and Trade [see section 5.2.2]. Thanks to the Dillon (1960-1962) and Kennedy Rounds (1965-1967), the customs tariffs of the States participating in the General Agreement were slashed by nearly 50% [Agreement and Decision 68/411]. Following the Tokyo Round (1973-1979), a fresh one-third reduction in customs tariffs was agreed upon, to be implemented in eight stages the last of which was timed for January 1, 1987 [Protocol and Decision 80/271]. These tariff reductions made a considerable contribution to keeping the international trade system open, despite the fact that in the first years of the 1980s, the world economy went through the worst period in its post-war history causing protectionist pressures to flare up. Since 1985, the European Community committed itself wholeheartedly to the process of launching a new cycle of multilateral trade negotiations under the GATT. The round got underway at the Punta del Este (Uruguay) Conference in September 1986.
The Uruguay Round negotiations encompassed the revision of GATT rules and disciplines, plus the adoption of disciplines for "new" areas: the trade-related aspects of intellectual property rights, trade-related investment measures and international trade in services. Also on the agenda were the sensitive issues of agriculture and textiles, areas in which trade was traditionally subject to special rules and for which the participants were to devise an agreement for their gradual incorporation into the GATT framework. The conclusion of the Uruguay Round, in December 1993, resulted in a strengthening of the rules and disciplines of international trade, thanks to the reform of the provisions on safeguards, subsidies, anti-dumping measures, the balance of payments, the "standards" and "public procurement" codes. All these GATT agreements have been incorporated into European law [see sections 6.2.4 and 23.2.2].
Market access for industrial products has been considerably improved by a reduction of one third or more in the customs duties imposed by the industrialised countries and many developing countries on the following sectors: building materials, agricultural machinery, medical equipment, steel, beer, spirits, pharmaceutical products, paper, toys and furniture [see section 5.2]. The average level of tariffs for industrialised countries fell from 5% to about 3.5%, whereas it stood at 40% or more prior to the various rounds of GATT negotiations. In total, close to 40% of the EU's industrial imports are now duty free. On their part, developing countries apply substantial reductions of their customs duties on these products, whereas prior to the Uruguay Round they had taken very few such commitments. The EU played a major role in pushing through the conclusion, in March 1997, of the Information Technology Agreement under which tariffs on information technology products of countries accounting for 92% of world trade were phased out completely on 1 January 2000 [Decision 97/359 and Regulation 2216/97, see also section 17.3.5].
A first step was taken towards the liberalisation of world trade in services. It should be noted that trade is not limited to exchange of goods but also increasingly involves services, a sector which contributes nearly half of the EU's GDP. The General Agreement on Trade in Services (GATS) includes general rules for trade in this area, specific provisions for certain service sectors and national schedules showing the services and activities which each country agrees to open up to competition, with possible limitations [Annex 1 last amended by Fifth Protocol].
The GATS agreement establishes notably the principles: of the most favoured nation provisions, i.e. the principle that all third countries must be treated equally; of transparency on market access; and of national treatment, meaning that a company from a third country cannot be placed at a competitive disadvantage in relation to a domestic country. The Agreement established for the first time a multilateral framework based on satisfactory rules and comprising sufficient commitments to trigger the liberalisation process. The audiovisual sector was included in the GATS, which means that the rules relating to transparency and of progressive liberalisation apply to it. However, the EU has made no market access commitment nor, as a result, any commitments on national treatment. It also took an exemption from the principle of most favoured nation conditions and is, therefore, not bound to give equal treatment to all third countries. Basic telecommunications services were covered by the fourth protocol to the GATS, in February 1997, in a balanced package of measures respecting the most-favoured nation principle [Fourth Protocol and Decision 97/838]. The fifth protocol to the GATS, based likewise on the most favoured nation principle, provides better market access to financial services covering more than 95% of world trade in the banking, insurance and securities sectors [Fifth Protocol and Decision 1999/61].
The Uruguay Round negotiations included also the protection of trade-related intellectual property (TRIPs) [Annex 1 –Annex 1C]. Intellectual property concerns an ever-increasing part of world trade, be it related to pharmaceuticals, computer software, books or records. As trade has increased so too have cheating, counterfeiting and copying. A further problem has been the appropriation of brand names and, in the case of wines and foodstuffs, certain geographical appellations. The conclusions of the Uruguay Round have reinforced existing international conventions, for example the Bern and Paris Conventions for the protection of literary and artistic works, by bringing them within the ambit of the GATT dispute settlement procedures.
The TRIPs agreement has resulted in a strengthening of intellectual property rights concerning the protection of trade marks, industrial designs, patents and geographical appellations. A clear set of principles has been established for the enforcement through the national courts of intellectual property rights, any breaches being subject to sanctions under the dispute settlement procedure. The European Community has amended the Regulation on the Community trade mark [see section 6.2.4], notably in order to comply with the national treatment obligation established by the TRIPs Agreement [Regulation 3288/94]. According to the Court of Justice, even though questions relating to the TRIPs Agreement fall largely within the jurisdiction of the Member States, where a provision of the agreement is to be applied to situations covered both by national and by European law, it is in the EU interest to avoid any differences of interpretation and national courts should apply the European trade mark law [Case C-53/96].
The Uruguay Round resulted also on an Agreement on trade-related investment measures (TRIMs) [Annex 1 – Annex 1A]. An illustrative list of non-permissible measures is included in the agreement, covering such things as local content rules, trade balancing and local sales requirements. Such measures must be phased out over a two- to seven-year period, depending upon whether the country is developed or developing. The TRIMs Agreement is particularly important for the EU, which is responsible for 36% of direct foreign investment in the world and receives 19% of such investments on its territory.
The Agreement on Government Procurement, of which are part the EU, the United States, Japan and a limited number of other countries on a reciprocal basis, is open to all and is largely based on the European rules on public procurement concerning, in particular, the procedures, the thresholds which apply and the recourse mechanisms if firms believe that they have been denied equal treatment [Annex 4, see section 6.3]. The Agreement is founded on "national treatment", in accordance with which foreign suppliers of goods and services must be dealt with in the same way as national suppliers. It includes, in principle, water, ports, airports, electricity and urban transport, although not every country has made a commitment in each sector.
The World Trade Organisation (WTO), established in 1995, has replaced the GATT, taking all the agreements concluded under its auspices, and settling trade disputes on a multilateral basis [Agreement and Decision 94/800, , amended by Decision 2014/115 and Protocol]. In fact, the WTO brings together under a single decision-making and administrative body the three agreements resulting from the Uruguay Round: the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS) and the Agreement on trade-related aspects of intellectual property rights (TRIPs). The WTO operates on the basis of a ministerial conference, which must meet at least once every two years, and of a General Council made up of representatives of all the member countries. The European Union as well as all its Member States are members of WTO, a code of conduct defining the participation of the EU and its Member States in areas of shared power.
The WTO is open to those who agree to abide by the entire Uruguay Round package of rules. This increases the certainty of the world exchange system, since all the members of the WTO are perfectly aware of their own rights and obligations and of those of their partners. The national law of each contracting party must be in conformity with the rules of the WTO, thus precluding unilateral action.
The unique structure of the WTO allows an integrated system of dispute settlement. The parties must refrain from making rulings themselves regarding violations and must abide completely by the provisions of the dispute settlement procedure in dealing with all matters, including the determination of "cross-retaliation". The Agreement establishes an appeals procedure providing for a review of the conclusions of the "panels" of first instance. A Dispute Settlement Board (DSB) oversees the proceedings. Safeguard measures are authorised, but their scope is limited both in terms of the measures taken and of their duration. A Safeguards Committee monitors all measures taken and ensures that they are in conformity with the agreement. A regulation defines the measures that may be taken by the Union following a report adopted by the WTO dispute settlement body concerning anti-dumping and anti-subsidy measures [Regulation 1515/2001, last amended by Regulation 37/2014]. One of the first procedures initiated by the EU concerned the failure of the USA to repeal their Anti-dumping Act of 1916 [Commission notice]. On their side, the USA have led battles inside the WTO and succeeded in modifying to their satisfaction the common organisation of the market in bananas [Regulation 1234/2007 and Geneva Agreement] and on meat produced with the aid of hormones [Directive 96/22, see section 25.7].