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Wednesday, 12 February, 2003, 18:54 GMT
A century of free trade
wall st
The Wall Street crash of 1929 led to the slump
BBC News Online presents an illustrated history of the struggle over free trade this century which lead to the establishment of the World Trade Organisation.

Trade was the engine of economic growth in the 19th Century.

Countries dropped their restrictions on free trade, while the Gold Standard was used worldwide to measure the value of goods and currencies, providing a universal currency.

Britain was the workshop of the world, but Germany and the United States gained in economic power.

The WTO has its headquarters in Geneva

After the Wall Street crash, which led to a worldwide slump in economic growth, the world reverted to protectionism.

Trade fell even faster, causing more unemployment and prolonging the downturn.

Some countries turned to dictators like Hitler for economic and political salvation.

Relief kitchens fed thousands in the 1930s

After two world wars, most of Europe and Japan was struggling to feed its people, let alone prosper. Nations became dependent on the revival of world trade for vital income.

America, which suffered less from the crippling effects of the wars, was economically dominant and was under pressure to open up its markets to other countries.

Europe suffered vast bomb damage in the war

In 1948, the General Agreement on Tariffs and Trade (GATT) was formed, in the Cuban capital, Havana. It was the result of 23 countries getting together to sign an agreement to reduce customs tariffs.

The Geneva-based organisation helps promote free trade by persuading countries to abolish import tariffs and other barriers to open markets.

The first round of trade negotiations resulted in 45,000 tariff concessions.

A meeting in Havana in 1948 created the GATT

And five more rounds led to a dramatic drop in tariffs on manufactured goods and a rapid increase in trade, helping the create "economic miracles" in Germany and Japan.

In 1964-67, the Kennedy Round of talks, named in honour of the late US President, achieved tariff cuts worth $40bn.

The signing of the Uruguay Round deal in 1993

The most ambitious round of talks yet was the Uruguay Round started in Punta Del Este, Uruguay, which took place from 1986-93.

It included agriculture and services in the negotiations for the first time.

But political opposition to free trade grew in the 1990s. French farmers rioted over the organisation's deals, while union activists in the United States smashed Japanese cars.

Farmers rioted in Geneva, Paris and Strasbourg

Meanwhile, the World Trade Organisation superceded GATT in 1995. The new organisation was given more powers to enforce free trade rules, and a clearer mandate to promote free trade.

Membership of the WTO has now mushroomed to 142 countries with 28 more nations waiting to join.

The most important new member in China, whose membership was ratified in 2001 after 15 years of negotiations.

But critics of the system say it encourages the exploitation of workers in poorer countries.

In Seattle there were mass anti-globalisation protests

They say that the rich countries have maintained protectionist policies, and that poor countries do not have the type of manufacturing infrastructure to enjoy the benefits of free trade.

When the WTO tried to launch a new round of trade talks in Seattle in 1999, mass protests on the streets and disagreements between rich and poor countries led to failure.

The WTO faces fierce battles over the environment

Two years later in Doha, Qatar, the WTO was more successful: after fierce debate to overcome key controversies, a new round of trade talks was launched.

But the gap between rich and poor countries still remains large and many critics say that free trade policies are benefitting western nations more than developing countries.

It is clear that the organisation is still facing its biggest challenge since its creation a half-century ago.






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