Agreement on Two-Year Tariff Moratorium in the Uruguay Round

On February 13, 1990, a significant milestone was achieved during the Uruguay Round of multilateral trade negotiations, under the General Agreement on Tariffs and Trade (GATT), which took place in Geneva. An agreement was reached on a two-year tariff moratorium for developing countries. This decision marked an essential step in addressing the concerns of developing nations within the broader framework of international trade liberalization.

Context and Background

The Uruguay Round, initiated in 1986 and continuing until 1994, was the eighth round of trade negotiations under the auspices of GATT. Its aim was to create a more integrated and fair trade system by reducing tariffs and addressing trade barriers across various economic sectors. Developing countries had expressed concerns that rapid tariff reductions could adversely affect their economies, which were less diversified and more vulnerable to competitive shocks.

Key Provisions

• Tariff Moratorium: The agreement established a two-year period during which developing countries would have the opportunity to adjust to the new global trade rules without facing the immediate pressure of tariff reductions. This reflected a growing recognition of the need for a differential approach to trade rules that considers the distinct economic circumstances of developing countries.

• Special and Differential Treatment: The agreement underscored the importance of special and differential treatment for these nations, allowing them more time and flexibility to balance their economic development with global trade integration efforts.

Significance

This tariff moratorium was a crucial step in accommodating the interests of developing countries, which often struggled to compete on equal footing with their developed counterparts. By providing extra time, it aimed to foster a more equitable negotiation process, enhancing the inclusivity and sustainability of global trade agreements.

The decision also set a precedent for future trade negotiations, where the unique needs and capabilities of developing countries would be more carefully considered within international trade policy frameworks.

Aftermath

The Uruguay Round eventually concluded in 1994, leading to the establishment of the World Trade Organization (WTO) on January 1, 1995. The agreement on the tariff moratorium contributed to the broader goals of the Uruguay Round, which included significant tariff cuts and agreements on new trade-related areas like services and intellectual property.

The provisions for developing countries from the Uruguay Round, influenced by decisions like the tariff moratorium, have since remained a central topic in WTO discussions and negotiations, as efforts continue to bring about more balanced global trade practices.