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GEOG 216
Geraldine Akman

Reading 15 12/5/12 1:25 AM International Negotiation: governments agreed to engage in mutual tariff reduction • Linked reduced protection for each country’s import-competing industries to reduced protection by other countries against that country’s export industries The Advantages of Negotiation A mutual agreement helps mobilize support for freer trade. Negotiated agreements on trade can help governments avoid getting caught in destructive trade wars. Can help avoid trade war Acting unilaterally, each country will usually choose the outcome that appears in their best interest à prisoner’s dilemma Coordination International Trade Agreements: A Brief History Dates back to the 1930’s 1930: Smoot-Hawley Act • tariff rates rose steeply and U.S. trade fell sharply Needed to make bilateral agreements to counteract this Act à 1932 Multilateral negotiations began soon after the end of WW2. 1947: GATT, 23 countries à governed trade for 48 years • began as an agreement à contracting parties 1995: WTO GATT and WTO are designed to push the world economy into free trade. • Process of binding: the country imposing the tariff agrees not to raise the rate in the future • Prevent non-tariff interventions to trade o “grandfathers” existing import quotas Trade rounds are used to make forward progress. Kennedy Round: 1967, 50% reduction in tariffs by the major industrial countries The Uruguay Round th 8 round began in 1986 in Uruguay 7 years Document consisting of 400 pages Signed in Marrakesh, Morocco in 1994 Ratified by all major nations Trade liberalizations and administrative reforms Trade Liberalization Uruguay Round cut tariff rates around the world à moved to liberalize trade in agriculture and clothing
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