TRADE AGREEMENTS

Adapted from: World Trade is a Women’s Issue

By: Women Working Worldwide

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:

• Trade in services

A treaty has been signed by over 70 countries from the South which opens up their service industries to foreign firms. Foreign banks and insurance, transport and communication companies are now free to bring in their services and take out their profits. They are able to do this on a wide scale because of the privatisation programmes associated with structural adjustment.

• Investment

Many restrictions on the operations of foreign companies are now being removed. These restrictions included limits on the amounts of money that foreign firms could take out of a country. They also required foreign firms to use local materials in manufacturing. So removing restrictions benefits transnational corporations. It gives them increased freedom to reorganise their activities in the interests of greater profits for themselves.

• 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.

Transnational companies - the real winners

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.

The new agreements in the GATT Uruguay Round reflect the needs of TNCs. The situation of workers is increasingly shaped not by local employers and national governments but by TNCs and international institutions. This means that it is sometimes difficult for workers to develop a strong bargaining position locally. Workers’ organisations are having to consider new strategies.