WTO is the predecessor of GATT
Due to the particularity of its background, GATT inevitably had some limitations in its development process, which eventually led to its replacement by the WTO. It is inevitable for historical development. The limitations of the General Agreement are mainly reflected in the following aspects:
1. GATT was a "provisional agreement" when it was first established.
After it came into effect on January 1, 1948, it gradually evolved into an increasingly larger international organization, but it was not a formal international organization and could only be regarded as a quasi-international organization.
2． Many of GATT's rules are not rigorous, there are large gaps in their implementation, and some lack legal binding force.
Some countries understand the terms of the agreement in accordance with their own interests. The General Agreement lacks necessary verification and supervision means. For example, the General Agreement “uses dumping means to introduce products of one country into the domestic market of another country at a price lower than the normal value, if this causes substantial damage or creates a substantial threat to an industry that has been established in the territory of a certain country.” Regulations are difficult to define in actual implementation. Therefore, some countries use domestic legislation to levy dumping taxes, making it an important means for these countries to implement trade protectionism. Later, although the "Tokyo Round" supplemented relevant multilateral agreements, waves of trade protectionism emerged one after another.
3. There are still a lot of "grey areas" in GATT, with many exceptions.
Some contracting countries violate the principles of GATT and use domestic legislation and administrative measures to implement trade discrimination against other countries. It is not uncommon for them to use "grey areas" and force other countries to accept export restrictions on certain products through bilateral arrangements. Because there are too many exceptions to GATT principles, many principles cannot be implemented well. Too many exceptions and the misuse of exceptions have violated some basic principles of GATT. Although GATT has made remarkable achievements in tariff concessions, due to loopholes in the General Agreement, many contracting countries have adopted non-tariff barriers to circumvent tariffs. Despite provisions for the general elimination of quantitative restrictions, quantitative restrictions remain the main instrument of trade protectionism due to exceptions.
4. Disputes often cannot be resolved and it is difficult to achieve practical results.
GATT has played a significant role in resolving international economic and trade disputes. However, GATT's main means of resolving international economic and trade disputes is negotiation, and finally joint action by the contracting parties. So far, there are no legally binding coercive measures, which makes many major international trade disputes unresolvable.
In view of the limitations of GATT, the contracting parties generally believe that it is necessary to establish a formal international economic and trade organization based on GATT to coordinate, supervise and implement the results of the Uruguay Round.
At the beginning of 1990, Italy, the rotating presidency of the European Union, proposed the initiative of establishing a multilateral trade organization. On July 9, the European Union formally proposed this initiative to the Uruguay Round Negotiating System and Functional Negotiating Group in the name of 12 member states. In April of the same year, Canada also informally proposed establishing an institutional body. Switzerland and the United States also formally submitted proposals to the GATT Institutional Function Negotiation Group on May 17 and October 18, 1990 respectively. These ideas proposed the responsibilities and nature of the future international trade organization institutions from their different perspectives.
After consultations, in December 1990, at the Uruguay Round Ministerial Conference in Brussels, the Trade Negotiating Committee proposed to draft an organizational resolution. To this end, the "Agreement to Establish a Multilateral Trade Organization" became an integral part of the final draft agreement of the Uruguay Round in December 1992. After more than two years of revisions and bargaining by all negotiating parties, in November 1993, before the end of the Uruguay Round negotiations, the parties formed an "Agreement on the Establishment of a Multilateral Trade Organization" in principle. At the suggestion of the U.S. representative, it was decided to change the name of the "Multilateral Trade Organization" to the "World Trade Organization". On December 15, 1993, the Uruguay Round negotiations concluded successfully. On April 15, 1994, at the GATT Ministerial Conference held in Marrakech, Morocco, the agreements on various issues of the Uruguay Round negotiations were adopted and accepted in a "package" manner (without reservations and exceptions). It was signed by government representatives of 104 participating parties and officially came into effect on January 1, 1995.
At this point, according to the provisions of the Agreement Establishing the World Trade Organization, the WTO was formally established on January 1, 1995. In 1995, one year after the existence of the GATT in 1947, it assumed the role of a global economic and trade organization. play its positive role.
The WTO faced many contradictions and difficulties at the beginning of its establishment. Even when the WTO was born, it was not even able to elect a director-general. There is a fierce conflict between the United States and the European Union over the selection of the Director-General. Due to various reasons, the United States finally agreed to Renato Ruggiero, the former Italian Trade Minister recommended by the EU, as director-general. Ruggiero officially took office on May 1, 1995. On April 30, 1999, the term of the first Director-General of the WTO expired, and various countries had many disputes over the candidate for the new Director-General. In the end, after coordination among many parties, it was decided that Michael Moore of New Zealand would serve as Director-General for the first two years, and Supachai of Thailand would serve as Director-General for the next two years.
The WTO inherits the basic principles and spirit of GATT, but there are important differences between it and GATT. The main manifestations are:
First, GATT is temporarily effective and has never been It is not a substantive organization after legal approval by the parliaments of the contracting parties' countries or regions, while the WTO is a formal organization whose agreements are permanent, and its member states or regions have all legally approved WTO agreements.
Second, the legal provisions of the WTO are mandatory, while the legal provisions of the GATT are non-mandatory and only have an advisory nature.
Third, the function of GATT is mainly to deal with international trade in goods, while the WTO also applies to other fields such as service trade and intellectual property rights.
Fourth, the WTO’s dispute settlement system is more efficient than the GATT system, which greatly shortens the time to resolve international trade disputes.