As in previous years, this year also marks anniversaries of a number of historical events. The occasions will be observed or commemorated commensurate with the importance and interests of the nations linked to the happenings. Some of the anniversaries are quite significant for the entire world because of the critical role they played in making some historic changes. The 75th anniversary of the implementation of the General Agreement on Tariffs and Trade (GATT) is a significant one in that it founded economic bonds through trade among nations at a historic juncture.
Though it was on October 30 last year that 75 years of GATT was formally observed by the World Trade Organisation (WTO), the day actually marked the signing date of the multilateral agreement by 23 nations in Geneva way back in 1947. Moreover, GATT as a platform for trade negotiation was replaced by the WTO in 1995. In fact GATT was transformed into a better and expanded structured organisation named WTO. During its 46 years of existence, members or contracting parties of GATT negotiated a series of deals. These spells of negotiations are known as 'rounds.' The last one was Uruguay Round. It concluded with the establishment of the WTO.
It is to be noted that the Bretton Woods Conference held in 1944 had decided to set up three international bodies on the economic front. These are the International Monetary Fund (IMF), the International Bank for Reconstruction and Development--which later became part of the World Bank group--and the International Trade Organisation (ITO). The draft ITO charter contained provisions for liberalising trade in goods and services, lower restrictions on cross-border employment and investments and so on. Meanwhile, 15 countries immediately after the Second World War began initial discussions to undo the protectionist measures which were adopted before the great war. Eight more countries joined later. Their negotiations resulted in a set of trade rules and 45,000 tariff concessions. All these are documented under the GATT with formal signing on October 30, 1947. It was considered a temporary arrangement and the setting up of the ITO was also under process. On March 24, 1948, Havana charter was signed by 56 countries to establish ITO as a global body to set and guide rules-based international trade. But the US Congress, out of concern that ITO would intervene in domestic policy matters, did not agree to approve the charter. So, finally ITO did not see the light of day.
As GATT had already come into effect, it provided an alternative to ITO immediately. On January 1, 1948, the GATT was formally implemented as a law of international trade. Other countries slowly started joining the agreement later, and it was the sole multilateral instrument governing international trade between 1947 and 1994. The most favoured nation (MFN) and national treatment (NT) became two core principles of GATT as well as WTO. Many more obstacles and complex things were there from the beginning of the GATT and some argued that GATT, was an international treaty.
No doubt that GATT had failed to achieve its objectives for various reasons. Nevertheless, the journey of GATT is widely accepted as one of the most critical steps to make international trade less restrictive, to promote free trade to be exact, by developing a set of rulebooks. Countries over the last seven and a half decades have negotiated hectically to devise and revise rules and eliminate tariff barriers. The outcome is a rise in global trade. Statistics available with the WTO show that world trade volume today is roughly 43 times the level recorded in the early days of the GATT. The trade value has also ballooned almost 347 times from 1950 levels. Global trade has picked up steeply since the establishment of the WTO in 1995. As of 2021, world trade volume and value had expanded 4.0 per cent and 6.0 per cent respectively on average since 1995. The world's current MFN-applied tariffs stand at an average of 9.0 per cent today.
Small countries like Bangladesh benefited significantly, despite many criticism and limitations, from the multilateral trade rules devised by GATT and later WTO. The country also has a historical link with GATT. When GATT negotiation started, the undivided British India was a party. Later, during the signing of GATT, India and Pakistan signed it as two independent countries and also became founder-members of GATT. These two countries enjoyed some special waivers or benefit under the multilateral deal. Paragraph 11 of Additional Article XXIV of GATT said: "Measures adopted by India and Pakistan in order to carry out definitive trade arrangements between them, once they have been agreed upon, might depart from the particular provisions of this Agreement, but these would in general be consistent with the objectives of the Agreement."
After the independence of Bangladesh in 1971, the newborn country took a fast move to join GATT. The country formally applied for joining the agreement on October 10, 1972. At the time, Olivier Long was the director- general (DG) of GATT. Abdus Samad Azad, who was the then foreign minister of Bangladesh, wrote the formal letter to the GATT DG. The formal decision for accepting the application of Bangladesh was taken on November 10, 1972 and adopted by two-thirds majority of the contracting parties. The protocol for the accession was signed by Bangladesh on November 16, 1972. The protocol entered into force on December 16, 1972 and Bangladesh became a contracting party to the GATT. Two decades later, on January 1, 1995, the WTO replaced GATT and Bangladesh became one of the founder-members of WTO.
Bangladesh enjoyed a series of waivers as a least-developed country (LDC) in WTO negotiations which helped in building up the country's industrial base. Readymade garments (RMG), the largest export-earning sector, is the direct beneficiary of GATT's multifibre arrangement and WTO's agreement on textiles and clothing. GATT and WTO also contributed to safeguarding the international trade of Bangladesh in a competitive environment and providing necessary time to get ready for extensive competition. As the country is now set to come out from the LDC category by 2026, it will be an example on how GATT/WTO plays a critical role in the uplift of a poor country.
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