Friday, August 28, 2009

Uraguay Round and its Features

In January 1986, the 90 members of GATT showed their intention to have a new round of talks. This round started in September 1986. On 15th December 1913 an agreement took place in Genera Regarding the last act of ‘Uraguay Round’. Then in April 1994 in Morocco, GATT members signed on ‘Uraguay Agreement’. As a result the multilateral trade talks came to an end. Following are the main features of Uraguay Agreement.

1. Agriculture Products:

In the agreement the member countries have been induced to attach their trade on agriculture with the market. For this purpose they will have to reduce subsidies on exports and convert eh non-tarrif barriers into tarrif barriers. Moreover at average the tarrif rates will have to be decreased by 36%. The subsidies on agricultural exports will be decreased by 21%. Such cuts in subsidies and tarrifs will be brought in the period of 6 years by the rich countries and in the period of 10 years by the developing countries. While the least developed countries will remain exempted from such conditions. Once the subsidies are abolished on agricultural goods the production of agricultural goods will fall which is sold in the world market through dumping. But such situation will badly affect the under developed countries which have to import the food stuff in bulk amount. Therefore for compensation they will have to depend upon the existing and the potential facilities of IMF.

2. Industrial Products:

The industrial countries will abolish tarrif on steel, pharmaceuticals, wood and wood crafts. The developing countries will not only reduce the restrictions imposed on imports, but in future they will not bring any change in their tarrifs without the consultation of WTO.

3. Trade in Services:

A line of action has been stipulated in this agreement regarding the international mobility of services like financial services, telecommunication, transport, audio-visual services, tourism and other professional services. To liberalize the international mobility of services so many countries have made certain insurances. In this regard “Most favoured Nation Clause” will be abolished. The foreigners who supply services will be treated equal to domestic suppliers i-e they will not have to be faced with unnecessary restrictions etc.

4. Textile and Clothing:

The GATT had arranged for bilateral agreements under Multi-Fibre Agreement (MFA). But under Uraguay arrangements it has been decided to abolish such agreements with in the period of coming ten years. Moreover during this period the amount of remaining quotas will be doubled so that the access of goods in the world markets is ascertained.

5. Intellectual Property Rights:

Under this agreement the intellectual property rights like copy rights, trade markets, patent rights and other trade secrets will be protected. The minimum level of protection will be fixed for each type of right. As for patent rights the period of 20 years has been fixed. Moreover, the member countries will be directed to make legislation to protect such rights.

6. Subsidies:

In Uraguay Agreement, three types of subsidies have been interpreted.

(i) The forbidden subsidies which are given on exports.

(ii) The actionable subsidies which have negative effect on other countries.

(iii) The ‘Non-actionable subsidies’ which are given before industrial research and business competition. The territories and regions are affected as a result of these subsidies.

Under this agreement it has been decided to put a ban on counter-vailing measures which are used by countries to offset the effects of subsidies. However the under developed countries and former states f Soviet Union which are heading towards ‘Market Economy’ will be given extra time so that they could mould their subsidies in accordance with new rules of agreement.

7. Technical Barriers:

In Uraguay agreement it was admitted that the standards of goods, the quality controls, the standard certificates and testing producers are not un-necessary obstacles in the way of international trade. Therefore the agreement encourages the member countries to follow international standard of goods, though the goods could remain differentiated. Moreover in the agreement it has been settled that the countries will have to make necessary arrangements to protect the health of human being, animals and plants. Moreover, the efforts will have to be made to check environmental barriers.

8. Anti Dumping Laws:

Regarding dumping the rules has clearly been specified in the Uraguay agreement. To investigate regarding dumping the time period of anti-dumping measures and procedures to check dumping like issues has been comprehended in the agreement. Moreover to deal with controversial position of anti dumping laws the rules and procedures have been stipulated in this agreement.

9. Trade Related Investment Measure:

In Uraguay agreement all those measures have been proposed, to abolish which restrict the trade related investment, as to maintain a proportion of domestic and foreign currency in foreign investment. Moreover the quantitative restrictions in the way of trade related investment will be out to an end.

10. Safeguard Actions:

Under GATT article XX1X each member country was allowed to use safeguard arrangements if it realizes its imports as a danger to its industries. But after the Uraguay agreement it has been restricted to use such measures. Under the ‘Gray Area’ measures where one finds voluntary exports restraints, orderly marketing agreement etc will be considered unnecessary. The ‘Gray Area Measures’ will be abolished with in the period of 4 years of establishment of WTO. Moreover in this agreement all the safeguards which are provided under the article XX1X will be put under discipline. Moreover under developed countries having very small share in world trade will be protected against those safeguards which are applied by the developed countries.

11. Cope with Balance of Payments Problem:

According to Uraguay Agreement the countries which impose quantitative restrictions (QRs) to remove deficit in balance of payments, they will have to follow such a method where by they could have a least effect on the world trade. Rather quantitative restrictions, they should depend upon import surcharges and import duties.

Critical Analysis of Uraguay Agreement:

No doubt the formal rectification of the agreement and interpretation of this agreement will require the period of one or two years. However it had been stipulated that what would be the frame work of world trade in 21st century. The developed countries have expressed their greater concern to the success of this agreement. Although the developed countries are integrating themselves in economic unions, yet it will not be possible for them to impose strict restrictions on the exports of developing countries. It is so because that two third of WTO members are from developing countries, and all the decisions will be made through un-weighted voting system. Moreover the concessions which are enjoyed by the developing countries will remain operative. Again the poor countries from Africa will be given enough time to adjust themselves in accordance with rules of the agreement. Regarding the effects of such agreement some fixed type of reaction has come out. No doubt the developing countries differ in their properties yet they have played a vital role in framing the rules of the world trade. But the practice of purchasing the non tarrif barriers on the part of the developed countries might not come to an end even after the year 2005 the year stipulated for this purpose. In such circumstances the dream of developing countries to have an easy access in the markets of developed countries regarding textile, clothing, leather and agricultural goods would not be realized. Moreover the free trade will give rise to so many structural problems which could not be compensated. The concessions which the developing countries were having in the markets of developed countries under “Generalized system of Preferences” (GSP) would no more be existing.

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