Gatt also allows free trade areas (FTA), such as the European Free Trade Area, composed mainly of Scandinavian countries. Members of free trade agreements eliminate tariffs on trade with each other, but retain autonomy in setting their tariffs with non-members. The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement governing international trade. According to its preamble, its objective is to “substantially reduce tariffs and other barriers to trade and eliminate reciprocal and mutually beneficial preferences”. GATT was negotiated at the United Nations Conference on Trade and Employment and was the result of the failure of the negotiating governments in the creation of the International Trade Organisation (ITO). The GATT was signed in 1947 and lasted until 1993, when it was replaced by the World Trade Organization (WTO) in 1995. The original text of the GATT (GATT 1947) remains in force within the framework of the WTO, subject to the amendments to the GATT 1994. The European Economic Community (EEC) (also known as the Common Market in the English-speaking world and sometimes as the European Community even before being renamed in 1993) was an international organization created by the Treaty of Rome of 1957. Its aim was to achieve economic integration, including a common market, among its six founding members: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. Almost all countries export and import products to take advantage of growing international trade. It is important to note that UNCTAD is a strategic partner of the WTO. Both organizations ensure that international trade helps low- and developing countries accelerate their pace of growth. On 16 April 2003, wto and UNCTAD also signed a Memorandum of Understanding (MoU) which lists areas of cooperation to facilitate joint activities between them.
The IMF`s mission is to monitor the international monetary and financial system and to monitor the economic and financial policies of its 188 member countries. This activity is called “surveillance” and facilitates international cooperation. Since the end of the Bretton Woods fixed exchange rate system in the early 1970s, surveillance has developed largely through procedural changes and not through the acceptance of new commitments. The responsibilities of the Fund have changed from those of the guardian to those of the supervisor of member directives. The Fund generally analyses the adequacy of each Member State`s economic and financial policies for orderly economic growth and assesses the consequences of this policy for other countries and for the world economy. Help for small trade conflicts. If international trade grows, so does the chances of litigation. The WTO is helping to reduce these trade disputes and tensions between nations. Suppose Japan sells bikes for fifty dollars, Mexico sells them sixty dollars, and both should expect a US duty of twenty dollars.
If tariffs on Mexican goods are removed, U.S. consumers will move their purchases from Japanese bicycles to Mexican bicycles. As a result, Americans will buy from a more expensive source, and the U.S. government will not receive customs revenue. Consumers save ten dollars per bike, but the government loses twenty dollars….