Since World War II, governments have cooperated on a variety of efforts to reduce or eliminate import restrictions and export subsidies. They have been motivated by the conviction that deregulating, or liberalizing, trade would increase the volume of trade, promote economic growth, and improve living standards worldwide.

Trade liberalization initiatives have been pursued at the country-to-country level (bilateral level), among groups of neighboring countries (the regional level), and in the GATTAt the Bretton Woods conference following World War II, representatives of the United States, Great Britain, France, Russia, and 40 other countries created GATT to reduce barriers to international trade. It was an agreement not an organization. The functions of GATT were taken over by the World Trade Organizationan international body dealing with the rules of trade between participating nations when it was established in 1990., which was established in 1947 and included eight major, multiyear rounds of negotiations among a broad cross-section of countries (the multilateralmultiple countries working together to on a specific issue level – see Figure 11). A ninth round of discussions is currently underway. Two critical principles have guided post World War II trade liberalization efforts and have contributed significantly to their success:

1. The nondiscrimination principle stipulates that both trade restrictions and proposals to reduce trade restrictions should apply to all of a country’s trading partners equally, and that imported goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. will not be treated differently than domestic ones.
2. The principle of reciprocity dictates that all participating countries offer to reduce some of their own import barriers or export subsidies in exchange for comparable steps by their negotiating partners.

Agreements liberalizing trade at the bilateral, regional, and multilateralmultiple countries working together to on a specific issue levels have been highly successful over the past five decades. The eight major rounds of multilateralmultiple countries working together to on a specific issue trade talks since World War II have reduced average global tariffs from forty percent to five percent.²⁹  This reduction in tariffs has helped promote economic efficiency and saved consumers billions of dollars of income through lower prices.  Unfortunately, during worldwide recessions, like the one in 2009, countries are prone to increase tariffs to protect domestic industries and raise revenue.

While tariffs were low, and there was no thought of recession, the attention of trade negotiators turned to a range of more complicated barriers to trade. Development became a top priority.  The most recent round of global trade talks, known as the Uruguay RoundA World Trade Organizationan international body dealing with the rules of trade between participating nations round of trade negotiations, which took place between September 1986 and April 1994., was launched in 1986.  The ninth and as-of-yet uncompleted “Doha Round” began in 2001.

Click here for more information: Proliferation of Bilateral and Regional Free Trade Agreements May Threaten Multilateralmultiple countries working together to on a specific issue Talks.

Figure 11: Major Post-World War II Global Trade Rounds

29 Veseth, M., and Uchitelle, L. (2002).

Next:  Multilateralmultiple countries working together to on a specific issue Trade Liberalization: The Uruguay RoundA World Trade Organizationan international body dealing with the rules of trade between participating nations round of trade negotiations, which took place between September 1986 and April 1994. and the World Trade Organizationan international body dealing with the rules of trade between participating nations