Trade agreements, tariffs & protectionism
How trade agreements, tariffs and non-tariff barriers work under the GATT/WTO regime, with the law, dated instances and protectionist instruments exams test.
From GATT to the WTO
The modern trade order rests on the General Agreement on Tariffs and Trade (GATT), signed by 23 nations on 30 October 1947 and provisionally applied from 1 January 1948. GATT 1947 was negotiated in eight rounds; the last, the Uruguay Round (1986-1994), produced the Marrakesh Agreement of 15 April 1994, which established the World Trade Organization on 1 January 1995. The WTO absorbed GATT (goods), added the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and created a binding Dispute Settlement Understanding (DSU) with an Appellate Body.
The two pillars: MFN and National Treatment
Two non-discrimination rules anchor the system. Most-Favoured-Nation (MFN) treatment (GATT Article I) requires that any trade advantage granted to one member be extended immediately and unconditionally to all members. National Treatment (GATT Article III) forbids treating imported goods, once across the border, less favourably than domestic 'like' products. Article II binds members to scheduled tariff ceilings ('bound rates'), which may exceed actually 'applied' rates.
Permitted exceptions
The MFN principle is qualified. GATT Article XXIV authorises customs unions and free-trade areas (regional blocs such as the EU, established by the 1957 Treaty of Rome, and the USMCA, in force 1 July 2020, replacing NAFTA of 1994). The Enabling Clause of 1979 legalises the Generalized System of Preferences (GSP), under which developed economies grant non-reciprocal tariff cuts to developing countries. Article XX permits exceptions for public morals, human, animal or plant health, and conservation of exhaustible natural resources; Article XXI covers national security.
Types of trade agreement
Candidates should distinguish: (1) multilateral agreements under the WTO; (2) plurilateral deals binding only some members, such as the 1996 Information Technology Agreement; (3) regional/free-trade agreements (RTAs/FTAs) such as the African Continental Free Trade Area (operational since 1 January 2021) and the Regional Comprehensive Economic Partnership (RCEP), in force 1 January 2022, the world's largest by GDP; and (4) bilateral preferential deals. India's CEPA with the UAE (2022) and CECA with ASEAN illustrate the bilateral and regional layers.
The Doha Development Round, launched November 2001, remains unconcluded—its collapse pushed states toward RTAs, producing the 'spaghetti bowl' (Jagdish Bhagwati's term) of overlapping rules of origin. A 2017 bright spot was the WTO Trade Facilitation Agreement, the first multilateral deal concluded under the WTO, cutting customs red tape.