From the Era of Colonialism to Globalization: Making Rules in the GATT/WTO

Abstract

This paper inquires into linkage between colonialism and international trade rules with potential or actual outcomes therein. The approach is analytical not historical, though, historical evidence is referred to explicate the nature of linkage. Among many relationships, colonialism and mercantilism provided incentive structures to each other. Mercantilism inspired Europeans to play a catalytic role in breaking down the Ottoman Empire. When Ottoman Empire was broken down it opened doors especially for the British, French, and Dutch to get resources from around the world and support industrialization at home. The landscape was about to change after the Second World War as the Atlantic Charter had acknowledged the independence of colonized countries. Along with the end of the Second World War, and the independence of formerly colonized countries, three compelling issues – financial stability, development support, and resources management – were expected to be addressed for restructuring the globe. Thus, the International Monetary Fund (IMF) was created to address the problem of financial instability. The World Bank (WB) was created to support developmental needs. And, the General Agreement on Tariffs and Trade (GATT) was created to manage resources and facilitate trading relationship. The end of the Second World War started the process of ending colonialism politically, though its culmination took place when Macau was handed to China in 1999 by Portugal. Yet, making rules in the GATT had still full of colonial reminiscent even after the Second World War. As a result, rules that provide colonial exceptions and especial trading relationship with former colonies are legalized in the GATT. Colonialism with the ideology of mercantilism had taken root on two major concepts: first, to import raw materials at cheap price from colonized countries to manufacture goods at home; second, to export goods manufactured at home around the world including the colonized countries and restrain any importation of manufactured goods from colonial countries. GATT was supposed to end these two mercantilist concepts but unfortunately in its many provisions it sustains both concepts to serve protectionism, the new form of mercantilism. Against this background, this paper analyzes how the GATT reminds of the colonial concepts and how making rules in the World Trade Organization (WTO) is still struggling with these concepts in designing and establishing a legal system of global trade regime.