New Issues in the Uruguay Round and Beyond

Abstract

The General Agreement on Tariffs and Trade (GATT) is a treaty establishing a framework of rules and principles for policies affecting merchandise trade. It also provides a forum in which sovereign states periodically engage in reciprocal trade liberalisation and rule making.2 As a result of substantial reductions in tariffs through periodic 'rounds' of multilateral negotiations, rule making has gradually become as, if not more, important than liberalisation per se. Starting with the Kennedy Round (I964-7), but especially in the Tokyo (I973-9) and Uruguay (I986- ) rounds, an increasing number of agenda items involved the negotiation of rules and disciplines for specific trade-related domestic policies rather than further reductions in tariffs and other border measures. Rules pertaining to product standards, subsidies and government procurement were prominent items on the agenda of the Tokyo Round. The Uruguay Round further expanded the multilateral negotiating agenda by adding trade-related investment measures (TRIMs), trade-related intellectual property rights (TRIPs), and measures affecting the contestability of service markets. The trend for multilateral trade negotiations to address 'domestic' policies shows no sign of abating. Calls for a post-Uruguay Round negotiation have identified issues such as competition policy, foreign direct investment (FDI) regulations, innovation policies, and the interaction between trade and environmental policies as possible topics for discussion.3 In part the steady agenda expansion reflects changes in the structure of the global economy. The managerial and technological innovations of the last decade - such as just-in-time inventory management and the increased tradeability of services - created pressures for greater specialisation and geographical splintering of production. This in turn made regulations pertaining to services, FDI, transfer of technology and protection of intangible assets more important for both governments and firms. Flows associated with services, FDI and intellectual property (IP) are smaller than merchandise trade, but are quite substantial. Table I reveals that global merchandise trade in i990 was $3-5 trillion, while world trade in commercial services was about $820 billion, global receipts for IP were some $33 billion, and income flows