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General Summary

According to classical trade theory, moving from a closed economy to free trade produces substantial economic gains because trading countries benefit from specialization and more efficient resource allocation. In addition, many believe that trade not only brings these traditional "static gains" from specialization, but also the adoption of new technologies and skills, leading to higher productivity – the so-called "dynamic gains" from trade.

These notions of gains from trade motivate the commitment to trade liberalization embodied by membership in the World Trade Organization (WTO). The WTO is the successor organization to the General Agreement on Tariffs and Trade (GATT), which produced the WTO through the Uruguay Round of trade negotiations from 1986-1994. As of February 5, 2003, the WTO has 145 member countries, with many more in the process of joining.

The GATT, an ad hoc body designed to facilitate trade liberalization amongst an initial group of 23 countries, was established in 1947. This body was formed for both economic and geopolitical reasons, in an effort to provide stability and a means for resolving disputes after trade barriers had been established by many industrial countries in the 1930s, exacerbating the Great Depression. Trade liberalization, therefore, has been underway in one form or another for over half a century.

Now that the WTO has been established, liberalization has taken place through additional “rounds” of trade negotiations and Ministerial Conferences. Ministerial Conferences occur at least once every two years, and constitute the decision-making mechanism of the WTO, where members either agree or disagree on various measures and processes for liberalizing trade. Recent Ministerial Conferences have taken place in Doha (November 2001), Seattle (November/December 1999), Geneva (May 1998), and Singapore (December 1996). Upcoming is the Fifth Ministerial Conference to take place September 10-14th, in Cancun, Mexico. [1]

Negotiations are typically arduous and complicated, as they cover all manner of goods and services. Moreover, countries have usually erected trade barriers over time for a variety of reasons: to generate revenue; to protect industries; to protect special interests; to provide stability in employment or prices; the list goes on. Governments negotiating with one another must find means to reduce these barriers, taking into account all of the above.

The “Doha round” of trade negotiations begun in 2001 after the Fourth Ministerial Conference in Doha, while continuing with trade liberalization that had been in progress long before, also displayed a new focus on development. This is known as the Doha development agenda.[2] It has made central to the trade negotiations numerous issues of specific concern to developing countries: access for agricultural goods to developed world markets; access to pharmaceuticals at affordable prices for poor countries; and the costly implementation of trade policies for developing countries, to name just a few.

Finally, whether and how the benefits predicted by trade theory correspond to gains for citizens in the real world remains the subject of intense debate. The extent to which countries’ sovereignty is constrained by WTO agreements is also part of this debate. The WTO, therefore, has become an extremely controversial institution, as evidenced by the protests in Seattle in 1999 and others since then. Many interpret the WTO’s activities in the context of the larger debates about the Washington Consensus [3] and globalization.

Debate over feasible solutions to these problems and issues will continue in Cancun. These issues and debates are summarized in this section of the Global Trade Negotiations site, in the hope that all parties can be as informed as possible.

[1] For a summary of issues to be discussed at this conference, refer to our Cancun page.

[2] For further discussion, see WTO: The Doha Declaration Explained.

[3] The Washington Consensus.

Last updated February 2003