Foreign Trade and Investment Law

This essay provides an analysis of the history of international trade agreements under the purview of the GATT system and the World Trade Organization (WTO), as it came into being in the year of 1994.

Running head: FOREIGN TRADE AND INVESTMENT LAW
Foreign Trade and Investment Law
Name of the Student
Name of the University
Author Note

1FOREIGN TRADE AND INVESTMENT LAW
The erstwhile GATT system that has now been replaced by the WTO or World Trade
Organization as well as the agreements that are contained in the famous Uruguay Round
Package is based on a General Agreement on Tariffs and Trade. This agreement was
negotiated in the year of 1947 by as many as twenty three participants and established central
principles which constrain as well as guide different types of nation-wide trade policies,
provided of course that governments are able to ensure multiple cooperation with regard to
trade.1 The WTO or World Trade Organization is a body, which has taken off from this
General Agreement as a basis for dispute settlement and institutional cooperation on various
types of trade matters among all the members of the organization. Although the GATT core
principles are those that continue to be in place even now, it is difficult to comprehend the
Uruguay Round Package unless it is analyzed in tandem with these principles.2 This essay
provides an analysis of the history of international trade agreements under the purview of the
GATT system and the World Trade Organization (WTO), as it came into being in the year of
1994.
GATT 1994 is in essence quite a short agreement. It lists all the different provisions
that are covered by it, while offering several explanatory notes at the same given time. While
it would certainly have been preferable if a fully revised and single GATT text is what had
emerged from the well-known Uruguay Round, such a case proved to be quite impracticable.3
1 Clarke, D., McGrady, B. and World Health Organization, 2018. Law and health taxes (No.
WHO/HGF/EAE/HealthTaxes/2017/Paper6). World Health Organization
2 Duque, G.A.G., 2019. Interpreting WTO Rules in Times of Contestation (Part 3) ‘Could the United States
Justify Its Tariffs on Aluminium and Steel Invoking Article XXI (b) of the GATT?’. Global Trade and Customs
Journal, 14(2), pp.80-89
3 Francois, J. and Whittaker, J., 2018. Colombia–Measures Relating to the Importation of Textiles, Apparel and
Footwear (DS461). World Trade Review, 17(2), pp.335-352

2FOREIGN TRADE AND INVESTMENT LAW
Even a simple rewriting of GATT 1947 to initiate such changes as a replacement of
references to the contracting parties on the part of the members of the WTO is something that
raised a number of difficult questions. A few of the changes could have been introduced and
that too without any kind of difficulty, there are others who could have raised issues and
which could have involved re-opening agreements that had been very painfully negotiated.
GATT 1994 is in essence an agreement which is comprised of four important elements. The
most obvious of these is the fact that these is an agreement that is a collection of important
provisions on trade as had been agreed upon in the previous General Agreement on Tariffs
and Trade that had been draw up and signed in 1947.4 An important thing to note in this
respect is an exception, which is that the provisions under the GATT agreement are those that
exclude very explicitly, the Protocol of Provisional Application. This Protocol of Provisional
Application is a legal instrument which constitutes the legal basis on which the GATT
Agreement of 1947 had been applied and in a general way. There are times when the Protocol
of Provisional Application or PPA as it is commonly known, is alluded to also as a
Grandfather Clause.5 It is a clause which permitted the signatories to the GATT agreement of
1947 to engage in the application of mandatory national laws that were not entirely consistent
with the terms and conditions of GATT, in spite of such inconsistency.6
By the year of 1994, none of the Pre-GATT agreement laws held any significance
whatsoever. Only one of these continued to be in effect and that was the Jones Act. The Jones
Act gave the United States of America the right to keep its domestic shipping routes reserved
4 Hahn, M., 2018. The Multilateral and EU Legal Framework on TDIs: An Introduction. In The Future of Trade
Defence Instruments (pp. 3-16). Springer, Cham.
5 Hoda, A., 2018. Tariff Negotiations and Renegotiations under the GATT and the WTO: Procedures and
Practices. Cambridge University Press
6 Koul, A.K., 2018. WTO Agreement on Rules of Origin, 1994. In Guide to the WTO and GATT (pp. 191-204).
Springer, Singapore.

3FOREIGN TRADE AND INVESTMENT LAW
only for vessels that were constructed in America, which were serviced by American crew
members and which had the American flag posted and flying high in each and every one of
them.7 The third as well as the fourth elements of the GATT agreement of 1994 are those that
were finalized during the Uruguay Round. These constitute six understandings that interpret
particular points in many different GATT provisions as well as in the Marrakesh Protocol
incorporating the market access commitments of each and every member of the World Trade
Organization. Both these understandings as well as the Marrakesh Protocol are those that
have been reviewed in the agreement in immediately succeeding paragraphs. 8
The GATT 1994 rules on regional trading agreements or Article XXIV are those that
have been designed specifically to make sure that countries that engage in the formation of
regional trading agreements are those that move to free trading activities amongst each other
and in the most genuine of ways.9 Article XXIV is also a provision which requires customs
unions to set common import duties in addition to various other types of imports that are
incorporated into the union at a level which is never restrictive or higher than the overall level
of the original members prior to the formation of the union. The provision demands that
compensations need to be made for any type of increase in this respect.10 The Free Trade
Area as per this provision are those that are likely to go ahead and avoid raising any types of
duties against outsiders.11
7 Koul, A.K., 2018. Emergency Action on Imports of Particular Products (Art. XIX). In Guide to the WTO and
GATT (pp. 313-317). Springer, Singapore
8 Kugler, K., 2018. United States–Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea
(US–OCTG (Korea)), DS488. World Trade Review, 17(2), pp.353-360
9 Lee, Y., 2018. International trade and investment law. Australian Year Book of International Law, 35, p.481.
10 Liu, H. and Gao, R., 2018, April. The Role of Trade Facilitation Rules on Promoting Global Supply Chains in
China Pilot Free Trade Zones. In Proceedings of the 2018 International Conference on Internet and e-
Business (pp. 285-288). ACM.
11 McGrady, B., 2018. Health and international trade law. In Research Handbook on Global Health Law.
Edward Elgar Publishing.

4FOREIGN TRADE AND INVESTMENT LAW
When it comes to balance of payments it needs to be remembered that GATT 1994 is
an agreement that enables countries that are faced with difficulties with regards to balance of
term payments to introduce a number of important trade restrictions. The understanding that
was reached in the course of the Uruguay Round on all of these provisions is quite a
significant one, especially with regard to the numerous kinds of restrictions that such
countries could be allowed to go ahead and introduce.12
Article XII is basically the only provision under the balance of payments chapter that
is made available to all the developed countries of the world, and which allows import
restrictions to be imposed in the event that these are necessary to curb a number of imminent
threats, to build reserves that are quite low or to bring about a halt to the imminent decline of
reserves.13
The new understanding with regard to balance of payments as outlined in GATT 1994
is something that formally endorses changes that entail the amendment of both the articles.
Members of the World Trade Organization have on more than one occasion confirmed a
commitment to the introduction or passage of price based measures such as import deposit
requirements and import surcharges, with these being regarded as having the least type of
disruptive effect on any kind of trading activity.14 Such an understanding is one that has come
to be accepted by members of the World Trade Organization quite readily even though it
implies that duties may have to be imposed at levels that are higher than the maximum level
12 Peng, S.Y., 2019. A New Trade Regime for the Servitization of Manufacturing. Paradise Lost or Found
13 Thanh, V.T., 2018. 10 TPP and state-owned enterprises in Viet Nam. Emerging Global Trade Governance:
Mega Free Trade Agreements and Implications for ASEAN, p.10.
14 Voon, T., 2019. The Security Exception In WTO Law: Entering a New Era. AJIL Unbound, 113, pp.45-50

5FOREIGN TRADE AND INVESTMENT LAW
that is sanctioned for each and every one of the members of the WTO with the stipulation,
that members shall make an effort to avoid imposing new restrictions on trade that are
quantitative in nature.15
Thus, the GATT 1994 is definitely one of the most significant of trading agreements
that played a truly vital role in shaping trading relations in the world ever since it came into
existence in 1947, as well as after it was revised in the year of 1994. The imposition of
trading duties, and the duties and responsibilities that the members of the World Trade
Organization are expected to exercise in order to ensure smooth and efficient fulfillment of
trading obligations are those that are well outlined in the GATT 1994 agreement.
15 Hennig, M., 2018. The Untouchable Nature of the ‘EU Seal Regime’—Is the European Union Liable for the
Damages Suffered by the Canadian Inuit Due to the Violation of WTO Law in EC—Seal Products?. The
International Journal of Marine and Coastal Law, 33(2), pp.403-414.

6FOREIGN TRADE AND INVESTMENT LAW
References and Bibliography
Clarke, D., McGrady, B. and World Health Organization, 2018. Law and health taxes (No.
WHO/HGF/EAE/HealthTaxes/2017/Paper6). World Health Organization
Duque, G.A.G., 2019. Interpreting WTO Rules in Times of Contestation (Part 3) ‘Could the
United States Justify Its Tariffs on Aluminium and Steel Invoking Article XXI (b) of the
GATT?’. Global Trade and Customs Journal, 14(2), pp.80-89
Francois, J. and Whittaker, J., 2018. Colombia–Measures Relating to the Importation of
Textiles, Apparel and Footwear (DS461). World Trade Review, 17(2), pp.335-352
Hahn, M., 2018. The Multilateral and EU Legal Framework on TDIs: An Introduction. In The
Future of Trade Defence Instruments (pp. 3-16). Springer, Cham.
Hoda, A., 2018. Tariff Negotiations and Renegotiations under the GATT and the WTO:
Procedures and Practices. Cambridge University Press
Koul, A.K., 2018. Emergency Action on Imports of Particular Products (Art. XIX). In Guide
to the WTO and GATT (pp. 313-317). Springer, Singapore
Koul, A.K., 2018. Legal Framework of GATT, 1994. In Guide to the WTO and GATT (pp.
87-103). Springer, Singapore.
Koul, A.K., 2018. WTO Agreement on Rules of Origin, 1994. In Guide to the WTO and
GATT (pp. 191-204). Springer, Singapore.
Kugler, K., 2018. United States–Anti-Dumping Measures on Certain Oil Country Tubular
Goods from Korea (US–OCTG (Korea)), DS488. World Trade Review, 17(2), pp.353-360

7FOREIGN TRADE AND INVESTMENT LAW
Lee, Y., 2018. International trade and investment law. Australian Year Book of International
Law, 35, p.481.
Liu, H. and Gao, R., 2018, April. The Role of Trade Facilitation Rules on Promoting Global
Supply Chains in China Pilot Free Trade Zones. In Proceedings of the 2018 International
Conference on Internet and e-Business (pp. 285-288). ACM.
Global Supply Chains in China Pilot Free Trade Zones. In Proceedings of the 2018
International Conference on Internet and e-Business (pp. 285-288). ACM.
McGrady, B., 2018. Health and international trade law. In Research Handbook on Global
Health Law. Edward Elgar Publishing.
Peng, S.Y., 2019. A New Trade Regime for the Servitization of Manufacturing. Paradise
Lost or Found
Hennig, M., 2018. The Untouchable Nature of the ‘EU Seal Regime’—Is the European
Union Liable for the Damages Suffered by the Canadian Inuit Due to the Violation of WTO
Law in EC—Seal Products?. The International Journal of Marine and Coastal Law, 33(2),
pp.403-414.
Thanh, V.T., 2018. 10 TPP and state-owned enterprises in Viet Nam. Emerging Global Trade
Governance: Mega Free Trade Agreements and Implications for ASEAN, p.10.
Voon, T., 2019. The Security Exception In WTO Law: Entering a New Era. AJIL
Unbound, 113, pp.45-50