The General Agreement on Trade and Tariffs (GATT) is an international body of government representatives. Since 1947, it has been the key forum in which international trade agreements have been negotiated. GATT has established the rules for world trade. It has always promoted trade liberalisation. Trade liberalisation makes it easier for products from one country to enter the market of another country. Member countries of GATT have committed themselves to minimising trade barriers, like import quotas and tariffs.

Tariff - tax on imported goods

Quota - restriction on quantity of goods which can be imported

At first this approach was not supported by most countries in the South. They had been trying to protect new domestic industries which cannot compete with the more advanced industries of the North.

Trade liberalisation strengthens the economic domination of the North. So GATT has been regarded as a ‘rich man’s club’.

With the establishment of structural adjustment programmes, the governments of most countries have accepted that there is no choice but to become more open to international trade. This means agreeing to policies which encourage export production and foreign investment.

The last round of GATT was completed in Uruguay in 1993. A number of crucial decisions were taken. These decisions extended into new areas which has not been covered by GATT before. It was also decided to establish a new body to supervise the implementation of world trade agreements. This body is called the World Trade Organisation (WTO). It has replaced GATT. New areas to be supervised by the WTO include:

Patents and copyrights
Owners of trademarks will have a right to payment from companies which use their ideas. In practice this will mean less technology transfer and increased control by transnational corporations of the production of a wide range of products.

TNCs want to cross national boundaries freely. They want to be able to produce and sell goods in places where they can make the most profits. TNCs try to invest in countries and industries where there are immediate returns. It is these global corporations which have largely been behind this movement towards free trade.