The world`s major countries introduced the GATT in response to the waves of protectionism that paralyzed and contributed to world trade during the Great Depression of the 1930s. Successive GATT “cycles” have significantly reduced customs barriers on industrial products in industrialized countries. Since the beginning of the GATT in 1947, the average tariffs set by industrialized countries have increased from about 40% to about 5% today. These tariff reductions helped to promote both the considerable expansion of world trade after the Second World War and the resulting increase in real per capita income between developed and developing countries. The annual benefit of the elimination of tariff and non-tariff barriers resulting from the Uruguay Round agreement (negotiated between 1986 and 1993 under the aegis of GATT) was estimated at about $96 billion, or 0.4% of global GDP. Discussions have recently been announced on a new transatlantic trade agreement between the United States and the European Union. The agreement would reduce barriers to trade in goods and services worth more than half a trillion euros already circulating between the two regions. Supporters of the free trade agreement say it will help strengthen both economies by facilitating the supply of U.S. government contracts for EU businesses and freeing up investment capital for small and medium-sized enterprises. There are concerns, however, that interest in multilateral WTO negotiations will be denied, given that one-third of world trade is governed by the agreement. Meanwhile, agricultural trade remains a controversial area, with the two regions unlikely to agree on a policy change.
It remains to be seen whether the potential “tens of thousands of new jobs” will help both economies recover or widen the existing inequality gap (Deutsche Welle). A common market is a first step towards a single market and can be limited initially to a free trade area with relatively free trade in capital and services, but cannot be so advanced in reducing other trade barriers. The author of this article on Africa calls on Uganda and other African countries to oppose Economic Partnership Agreements (EPAs) with the EU and to use tariffs and subsidies to stimulate economic growth.