The need for improved global trade opportunities is becoming an increasingly common mantra among American corporations and small business owners alike.
The days when international commerce was limited to a few large corporations are long gone. In today's global economy, businesses of all shapes and sizes are exploring new ways to do business in a global context.
One of the most important advances in global trade occurred in the mid-nineties with the passing of GATT and the creation of the WTO under President Clinton. Athough GATT had technically existed for nearly half a century, its reach was limited until its expansion in 1995.
As a small business owner, global trade opportunities may represent the next frontier in your company's growth and future expansion. From selling overseas to importing foreign manufactured products and materials, GATT and the WTO will likely play a role in your business activities. Here's what you need to know about these important developments in global commerce.
The roots of GATT (General Agreement of Tariffs and Trade) can be traced back to 1947 and a failed effort to launch the International Trade Organization. Rather than creating a central organization, the nations involved with the process found agreement around GATT, creating a provisional and limited system to regulate tariffs and resolve international trade disputes. Although GATT was flawed and ultimately untenable, it did create the foundation for a streamlined approach to international trade, providing the genesis for significant growth in global commerce. The agreement was overhauled in 1994-1995, resulting in a more capable version of GATT that resolved many of its flaws and paved the way for more stable multinational cooperation around the issue of global trade.
WTO & GATT
One of the primary things accomplished through the GATT revision of 1994-1995 was the creation of the World Trade Organization, replacing the failed International trade Organization from the 1947 agreement. The WTO is an administrative body that is tasked with promoting fair trade among member nations. Its focus has now expanded to include a wide range of trade issues including environmental impacts and intellectual property rights.
GATT provisions include requirements for WTO members to assign 'most favored nation" status when dealing with other members. In the U.S., most favored nation status is often referred to with the term "normal trade relations".