GATT or GABB? – The Future Design of the General Agreement on Tariffs and Trade

Abstract

Long before the current crisis triggered by the recent United States initiatives in trade and monetary policy, a crisis of quieter dimensions was taking shape in GATT legal affairs. For some years now, the GATT's code of detailed substantive obligations has been in failing health. One source of the difficulty has simply been old age, for a number of the rules written in 1947 have become unresponsive to current attitudes and market conditions. A more basic problem, however, has been an increasing tendency among GATT participants to question the utility of any detailed substantive rules. Many have argued that the GATT would operate more effectively if it turned away from rule-oriented regulation and tried instead to influence government trade policy by means of nondirective consultative procedures. As long as the GATT code seemed to be working, arguments of this kind were usually regarded as a healthy counterbalance to "legalistic" tendencies. As various rules have become outdated, however, these arguments have come to have a much more important effect on GATT regulatory practice, supporting a growing tendency to put the old rules aside and to operate without any such rules at all. The accumulation of these responses has gradually been forcing the GATT to abandon the kind of legal system represented by its detailed rules, and has raised the possibility that GATT itself might one day be abandoned in favor of another institution more in keeping with the current taste for nondirective consultations. A United States proposal in June of this year to establish a new forum for trade policy discussion under the aegis of the OECD made this latter possibility seem not at all remote.