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International Trade
SUNY Buffalo Law School
Westbrook, Amy Deen

Background and History of Multilateral Trade Agreements

Sources of International Law

Multilateral (WTO)

Regional (NAFTA, EU)

National Government



Rules are codified in the U.S.C.

Why Trade?

Not every country can grow and produce everything it wants

Why regulate trade?
There is a huge temptation to control it
To get money (tariffs)

In 1860 96% of federal revenue came from tariffs
Since WWII never exceeded 2% of total revenue

1930s there was real changes
1930 Smoot Hawley huge tariffs 60%
1934 Reciprocal Trade Agreements Act
Negotiate tariff agreements with countries we like through reciprocity

After WW2
Bretton Woods Institution, July 1944
3 objectives
IMF- international monetary fund
IBRD- World Bank
ITO- commercial relations/ trade

Havanna Charter 1948

23 Geneva Oct 1948

Chapter 4 of ITO which they have been working on. They call it the GATT, sign it.

ITO- full of holes. Couldn’t satisfy it under post ww2 conditions. Full of exceptions. Shouldn’t have waited U.S. didn’t want to join these organizations any more. U.S. supposedly isolationist via George Washington.

GATT- what they still had
Protocal of Provisional Application
GATT – “was not really an organization” edited out the words organization
Contracting Parties- the contracting parties
CONTRACTING PARTIES – euphemism for the organization itself

Tariff negotiation is done in rounds
They go product by product and then everyone reduces by x%

More countries become contracting parties.

1947 Geneva
1949 Annecy

GATT great success

1960 Dillon
This round is a failure

1964 Kennedy Round
Across the board reductions instead of arguing about individual products
Began to cover agricultural goods
Other countries began to matter

Numerically the underdeveloped countries began to outnumber the developed countries
U.S. gets worried

1970s global economic crisis

Exchange rates have a lot to do with trade

U.S. had pinned the dollar to gold
Gold window

1972 U.S. closed gold window

Tokyo Round
Decide that we need more agreements


People were using other barriers to trade instead of tariffs like import licensing
Technical barriers


Countries could pick what they like

Everyone is better off they thought it would catch on?
It became a complex mess
There was a burst of forum shopping (i.e. between AD and GATT if u were members of both)

VER- Voluntary Export Restraints – circumvented many of the GATT provisions by bullying the other countries into not sending us their products

Lots of cheating (VER) (Dispute Resolution Forum shopping)

GATT had expanded greatly going into the Tokyo Round
Great diversity in the interests of the members
Lots more money involved
World economy has grown
Coverage of GATT has expanded
More types of measures

Dispute settlement under GATT was awful

Panel Arbitration system put into place

IP was never covered under GATT
Agriculture was left out of the GATT

Uruguay 1986
Most of 1980s looked like they were going to declare victory and go home

In 19

e we tariff foreign goods and we subsidize our own agricultural goods

Textiles and apparel
Governed by multifiber agreement
Allowed countries to have quotas to how much they allow in from different countries

In 10 years we will phase out multifiber agreement

DOHA wants to fix this but its difficult

If it limps along much longer who knows who will sign it

Basically congress is in charge of trade
Congress shares this authority with the President through delegations of congressional authority

Since 1990 executive trade power peaked
Regulated through committee structure

You cant regulate commerce as a plenary function

1934 first delegation

1974 Congress fasttract 1974 trade acts

President authority to negotiate tarrif and nontarrif agreements in Tokyo round

Fasttrack controversial- congress tells them what they are allowed to negotiate

Congress has 90 days no amendment up or down voting authority

Fasttrack annoys Congress

Bush renamed fasttrack as TPA and gets it in 2002-2005 +2 yr = 2007

U.S. has enormous amount of bilateral trade agreements

House W+M
Senate finance

USTR- Susan Schwab
All our trade agreements

Dept of commerce


WTO stuck