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GATT and WTO: Protectionism and free trade

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  1. Environmental taxes: Definition, inventory
    1. Context
    2. Goals
    3. Existing environmental taxes
    4. Implementation
  2. Environmental taxes: An effective tool?
    1. An effective tool under certain conditions
    2. Barriers
    3. Recommendations for future action

The history of modern international trade began in the early nineteenth century with the sharp reduction in transportation costs. This was due to the invention of the steam engine and its subsequent use in transporation. This led to the growth of international trade. However, this growth resulted in the creation of two opposite attitudes among the nations that participated in international trade. On one hand, governments liberalized trade and increased free trade agreements as they had the desire to sell in foreign markets.They knew that selling in foreign markets would promote economic growth. But, on the other hand, the desire to protect local industries from increasing foreign competition pushed these nations to create artificial barriers to trade.

The international economic situation has been dominated by either protectionism or free trade. Even the national trade policies formed by nations are dominated by either attitudes. Hence, one can observe alternating periods of protectionism and free trade in the last two centuries. The global trade environment, however, has been the victim of this fluctuation. In order to stop the fluctuations, different ways and means to control and regulate, trades were created during the 20th century. The GATT, that was signed in 1947, and the WTO that was formed in 1994, helped in the regulation and facilitation of trade among member nations.

As part of this study, the document will look at: How and why were the GATT and the WTO formed? Have they really contributed to world trade? In the first part, the study will be based on the history behind the signing of the GATT and the situation that led to this agreement. In the second part, it will look at the situation from 1947 till today, along with free trade and the WTO. Finally, it will analyze how to practically resolve the conflicts among trading nations.

Free trade with Europe began in 1846 with the decision of the United Kingdom to eliminate its laws or cereal Corn Laws. At that time, other major European nations remained as protectionists. In contrast to the United Kingdom, the United States gradually became very protectionist between 1791 and 1846. Tariffs on industrial products reached 50% in 1829 and were still 45% in 1883. The passage of this nation's free trade occurs only in the second half of the twentieth century.

From 1860, the proliferation of bilateral free trade between European countries lowered the average tariff on manufactured goods to 6-8% in 1875. The movement was led by the Franco-British in 1860. Then France canceled all its restrictions on British imports and reduced its tariffs(30% until 1864, then to 24%). The treaty establishes for the first time in international negotiation a clause from the most favoured nation: any benefit granted by one country to another country must be extended to the other signatory of the Treaty.

Protectionism is an economic doctrine, and the political recommends limiting especially the entry of products (goods and services) and / or capital from abroad to the country by various means. The objective is always to protect national economic actors from foreign competition, or that one hopes to encourage and protect domestic production and employment, whether one says it wants to maintain a high level of social protection (this contributing to rising prices and therefore less competitive), or whether production described as "sensitive" for which it is needed to preserve national independence.

Tags: modern international trade; formation of GATT and WTO; free trade; international economic situation; protectionism

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