International Rules Governing Trade

GAO discussed the international rules governing trade, focusing on international trade practices and international cooperation to overcome trade barriers. The main organization for the promotion of liberal international trade is the General Agreement on Trade and Tariffs (GATT), which was formed under the multilateral agreement of the same name. The trade discipline fostered by GATT operates under the principles of non-discrimination, national treatment, minimum protection, transparency, and bilateral or multilateral resolution of trade disputes. While GATT is the largest and most effective of the multilateral trade organizations, problems it has not effectively addressed include: (1) the agricultural sector, because GATT contains no accepted definition for agriculture and many exceptions under GATT apply to agriculture; (2) safeguards, which under GATT permit signatory nations to take emergency action to restrict imports that seriously threaten a domestic industry; and (3) the service industries, which have emerged as a major trade sector since the inception of GATT. One international organization that has attempted to address the problems of international trade in the service sector is the Organization for Economic Cooperation and Development (OECD). OECD has adopted three nonbinding codes relating to services: (1) a moratorium on new restrictions on trade in services; (2) provisions for the liberalization of foreign investment in service and other industries; and (3) provision for the equal treatment of domestic and foreign concerns in the service sector. The United States believes that GATT is a more appropriate forum than OECD because: (1) the membership of GATT is larger and includes both developed and developing countries; and (2) GATT provisions are binding, while OECD provisions are not.