Increasing international economic cooperation

Since the collapse of virtually all centrally planned economies several years ago, the market economy and freedom of capital flows have been embraced globally to the point of emergence of a global economy. At the same time, however, the ideological vacuum created by the end of communism has also been filled in part, with the rise of nationalism, regionalism and protectionism. These may prove detrimental to the vitality of the global economy. In order to counter protectionism and support the global economy, increased or adequate international economic cooperation is sought.

There has been significant evolution of the global economy in recent years, culminating in the setting up of the World Trade Organization (WTO), 1 Jan 1995, replacing the General Agreement on Trade and Tariffs (GATT) which had been operative from 1 Jan 1948. Other recent developments include the activities of prominent multilateral organizations including the World Bank (IBRD), the International Monetary Fund (IMF), the International Finance Corporation (IFC), the Organization for Economic Cooperation and Development (OECD) and the Group of Seven (G-7). There are calls to include China and Russia in the G-7 framework given their political and (potential) economic importance.

The General Agreement on Tariffs and Trade (GATT) was established 1 January 1948 in Geneva, and signed by 23 countries which were at the time engaged in drawing up a charter for the proposed International Trade Organization (ITO), to have been a specialized agency of UN. Based largely on selected parts of the draft ITO charter, the GATT Agreement was concluded in order to get trade liberalization under way quickly and was provided with only minimum institutional arrangements because it was expected that responsibility for it would soon be assumed by ITO. However, plans for ITO were abandoned when it became clear that its charter would not be ratified, and GATT was left as the only international instrument laying down trade rules accepted by nations responsible for most of the world's trade. In 1965, a new Part IV, on trade and development, was added to the text of GATT. As part of its services to developing countries, GATT set up in May 1964 the International Trade Centre which since 1968 has been jointly operated by GATT and the UN Conference on Trade and Development (UNCTAD). The latest GATT Agreement (GATT 1994), translates into an average reduction of worldwide tariffs by over 30%.

The organization General Agreement on Tariffs and Trade (GATT) has been replaced as of 1 January 1995, by the new World Trade Organization (WTO) upon signature, by 104 countries, of the Final Act of the Uruguay Round (15 April 1994, Marrakech) by 111 countries and of the Marrakech Agreement. The WTO covers the previous activities of the GATT, oversees an estimated US$ 6 million million trade annually and provides a legal mechanism to administer the Uruguay Round. GATT 1947 continued to exist to end 1995, allowing GATT member countries to accede to WTO and permitting an overlap in activities. GATT 1994 is an integral part of the WTO Agreement. The WTO framework ensures a "single undertaking approach" to the results of the Uruguay Round so that membership in the WTO entails accepting all the results of the Round without exception. WTO has a potentially larger membership than GATT and much broader scope in terms of commercial activity and trade policies to which it applies. Whereas GATT applied only to trade in merchandise goods, the WTO covers trade in goods, services and intellectual property, services being covered in the separate agreement General Agreement on Trade in Services (GATS). The WTO aims are to provide the principal contractual obligations determining how governments frame and implement domestic trade legislation and regulations; administer and implement the multilateral and plurilateral trade agreements which together make up WTO; act as a forum for multilateral trade negotiations; seek to resolve trade disputes; oversee national trade policies.