Twenty Years of Canadian Tradecraft: Canada at GATT, 1947-1967

Article excerpt

When the 23 original signatories to the General Agreement on Tariffs and Trade (GATT) concluded negotiations on 30 October 1947, they were confident that within a year or two the agreements reached would be subsumed into a new International Trade Organization (ITO). They were wrong, The ITO charter, concluded in 1948 in Havana, never entered into force. Instead, GATT was subsumed into a somewhat different international body, the World Trade Organization (WTO), only in January 1995. No country expected more of GATT than Canada, and no delegation was more enthusiastic about the prospect of a sound basis for international trade co-operation than that of Canada.(f.1) It was fitting that it was Canada which proposed during the Uruguay Round of GATT negotiations that members finally screw up their courage to do what they had failed to do in 1948 and set up a world trade body. In the intervening five decades, Canada proved an active, if not always happy, participant in trying to make multilateral trade co-operation work. Particularly during the formative first two decades, Canada was often disappointed with GATT.

Trade policy, trade relations, and trade negotiations are less about grand ideas and ideologies than about the pragmatic working out of very specific problems within the contours of existing political and economic realities, informed by the decisions and experiences of the past. Only as new patterns emerge are grand ideas hatched to provide intellectual coherence to changing behaviour. American historiography and Canadian romanticism have produced the myth that a multilateral trade and payments system anchored in the Bretton Woods monetary institutions and GATT paved the way for economic expansion and prosperity in the 1950s and 1960s. The reality was somewhat different. In 1947, multilateralism was new and unproven; the rules and institutions established in the 1940s led a precarious life throughout the 1950s and into the 1960s. The multilateral payments system established in the International Monetary Fund (IMF) never worked and was finally abandoned in the 1970s. The multilateral trade system gradually expanded in the 1950s because the overly ambitious ITO was allowed to die and the demands placed on GATT were kept small and sustainable. GATT did not achieve the kind of success that became the basis for the fond memories of the 1980s and 1990s until the conclusion of the Kennedy Round of negotiations in 1967. By that time, patterns had been set and habits formed that would cast a long shadow.

Canada found these two decades trying. By the end of the 1950s, Canadian officials were pessimistic about GATT's continuing capacity to meet Canadian objectives. The strong faith in multilateralism exhibited by Canadian negotiators at GATT's birth did not translate into results until well into the 1960s, by which time Canada had adapted to the new circumstances and proved more reluctant than others to make GATT work. In trade negotiations, timing is critical. For Canada, GATT delivered too little when Canada was ready and asked too much when it was not. This article reviews Canadian participation in the early evolution of GATT and considers GATT's not always helpful influence over the development of Canada as a trading nation.(f.2)

ESTABLISHMENT OF GATT

From the beginning, Canada was a staunch supporter of the idea of a multilateral trade agreement. Canadian officials believed that in a world of strong multilateral institutions the risks of protectionism and isolationism could be significantly reduced. Together with their American colleagues, they were convinced that the bilateralism and unilateralism expressed in the beggar-your-neighbour policies of the 1930s had contributed directly to war. With officials from Britain, they believed that multilateral co-operation based on American leadership would deter postwar United States isolationism and help to avoid the adjustment problems of the 1920s and 1930s. Canadian leaders also thought that multilateralism provided opportunities for Canada to influence directly the policies of the major powers in ways favourable to Canada's development as a nation. …