Tokyo Round

3 key takeaways

• The Tokyo Round was one of the major GATT negotiation rounds, focusing on reducing tariffs and addressing non-tariff barriers.
• It led to significant agreements on tariff reductions and the introduction of new codes for non-tariff measures.
• The negotiations involved over 100 countries, marking a major effort in multilateral trade liberalization.

What was the Tokyo Round of trade negotiations?

The Tokyo Round of trade negotiations was a significant series of trade discussions conducted under the framework of the General Agreement on Tariffs and Trade (GATT). These negotiations took place from 1973 to 1979 and aimed to reduce trade barriers, including both tariffs and non-tariff measures, to promote freer and fairer global trade. The Tokyo Round was the seventh round of GATT negotiations and marked a substantial effort to address the complexities of international trade during a period of economic change and globalization.

Key objectives of the Tokyo Round

The Tokyo Round focused on several key objectives to enhance the global trading system:

• Tariff Reductions: One of the primary goals was to reduce tariffs on industrial goods, making it easier and cheaper for countries to trade these products internationally.
• Non-Tariff Barriers: Addressing non-tariff barriers, such as quotas, import licensing, and technical standards, which could restrict trade even when tariffs were low.
• Trade Rules: Developing and refining international trade rules to ensure fair competition and resolve trade disputes more effectively.
• Sectoral Agreements: Negotiating specific agreements for particular sectors, such as agriculture and textiles, to address the unique challenges and trade barriers in those industries.

Major outcomes of the Tokyo Round

The Tokyo Round resulted in several significant achievements that had a lasting impact on global trade:

• Tariff Cuts: Participating countries agreed to substantial tariff reductions, with an average cut of around 34% on industrial products. These reductions helped to lower the cost of trade and increase the volume of international commerce.
• Non-Tariff Measure Codes: The Tokyo Round introduced a series of new codes and agreements aimed at reducing non-tariff barriers. These included:
  • The Agreement on Technical Barriers to Trade (TBT Agreement): Established rules to ensure that technical regulations, standards, and testing procedures do not create unnecessary obstacles to trade.
  • The Agreement on Government Procurement (GPA): Aimed to open government procurement markets to foreign competition by establishing rules and procedures for government purchasing.
  • The Agreement on Import Licensing Procedures: Sought to simplify and make more transparent the procedures for import licensing.
  • The Agreement on Subsidies and Countervailing Measures (SCM Agreement): Addressed the issue of government subsidies that distort trade and the measures that could be taken to counteract these subsidies.
• Dispute Settlement Improvements: Enhanced mechanisms for resolving trade disputes between countries, making the process more structured and reliable.

Impact and significance

The Tokyo Round had a profound impact on the global trading system:

• Trade Liberalization: The agreements reached during the Tokyo Round significantly reduced trade barriers, promoting greater global economic integration and trade growth.
• Strengthened Multilateralism: By involving over 100 countries, the Tokyo Round reinforced the importance of multilateral trade negotiations and cooperation under the GATT framework.
• Foundation for Future Rounds: The Tokyo Round laid the groundwork for subsequent GATT and World Trade Organization (WTO) negotiations, including the Uruguay Round, which eventually led to the establishment of the WTO in 1995.

The Tokyo Round of trade negotiations was a pivotal moment in the history of international trade, contributing to the liberalization of global trade and the establishment of rules that continue to influence the international trading system today. Its focus on both tariff and non-tariff barriers helped to create a more open and fair trading environment, fostering economic growth and development worldwide.