Surveillance Schemes: The GATT\u27s New Trade Policy Review Mechanism

In 1986 the Contracting Parties to the General Agreement on Tariffs and Trade (GATT) launched the Uruguay Round of multilateral trade negotiations, the most ambitious round of trade negotiations to date. The Contracting Parties to the GATT agreed in the Punta Del Este Declaration to introduce into the GATT system three new sectors for negotiation: services, trade-related intellectual property rights (TRIPs), and trade-related investment measures (TRIMs). In addition, for the first time in GATT history, the Contracting Parties agreed to devote a negotiating group exclusively to negotiating the tricky aspects of international trade in agricultural products. Another goal of the Uruguay Round is to abolish the Multifiber Arrangement (MFA), which currently regulates international trade in textiles. As originally conceived, the GA TT was to be the international organization for the liberalization of world trade. Judging by the dramatic lowering of tariffs that has occurred since 1947 when the GATT was established, the GA TI has been singularly successful. In the last few years, however, especially in the years following the 1973 oil crisis, the GATI has faced the proliferation of nontariff barriers (NTBs) within the territories of the Contracting Parties. This so-called new protectionism is a field in which national governments have been most imaginative. With this new development, the Contracting Parties soon realized that world trade could no longer be liberalized simply by lowering tariffs. As long as the Contracting Parties were unwilling to go so far as to create a world competition law, scholars suggested that one way to proceed was through better coordination or harmonization of Contracting Parties\u27 trade policies. However, such harmonization requires an enhanced transparency of national laws, law-making, and underlying trade policy. Although the GATI, except for article X, does not expressly provide for enhanced transparency, a tendency toward requiring enhanced transparency is already visible in the Uruguay Round. For example, the inclusion of TRIPs and TRIMs in the agenda of the Round can be explained as a move toward requiring enhanced transparency. Enhanced transparency will most likely become a key aspect of future GATI agreements. In fact, one of the few agreements concluded thus far in the Uruguay Round moves the world system of trade toward enhanced transparency and, thus, toward more effective trade policy coordination. That concluded agreement is the Trade Policy Review Mechanism (TPRM), which, simply stated, is a scheme purporting to regularly monitor the trade policies of the Contracting Parties to the GA TI and to estimate the impact of those policies on the multilateral system. The TPRM, not so much in its present form, as analyzed herein, but in its future evolved form, will likely make a great contribution to the multilateral system. This article describes and analyzes the current form of the TPRM, and advances some proposals for its future formation. The article is divided into five parts: Part I deals with the origin and the objectives of the TPRM; Part II analyzes the TPRM scheme and its functioning thus far; Part III presents the legal underpinnings of the TPRM; Part IV reviews and compares the surveillance schemes of the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) with the TPRM, since it is my belief that GATT\u27s TPRM can draw some valuable lessons from the experience of other international organizations; and Part V sets forth conclusions and proposals to strengthen GATT\u27s newly introduced surveillance scheme