U.S. Department of State
95/06/07 Fact Sheet: Uruguay Round Agreement Reforms & US Trade
Bureau of Public Affairs


Fact Sheet: Uruguay Round Agreement Reforms And U.S. Trade Policy

On December 15, 1993, 123 countries, accounting for more than 90% of 
world trade, concluded a historic agreement to reform international 
trade.  The Uruguay Round of multilateral trade negotiations, conducted 
under the auspices of the General Agreement on Tariffs and Trade (GATT), 
extended the GATT's rules to new areas of trade and updated its 
organization to conform to a more dynamic global trading system.  As of 
May 1995, 128 countries are either members or in the process of acceding 
to the WTO.

The new World Trade Organization (WTO) effectively replaced the GATT on 
January 1, 1995.  By reducing barriers to global commerce and expanding 
U.S. trade opportunities, they increase U.S. economic competitiveness 
and can help generate higher real wages and living standards for 
Americans.

Specifically, the agreements include:

--  Lower tariff and non-tariff barriers for manufactured products and 
other goods;

--  Rules to protect the intellectual property of U.S. entrepreneurs, 
entertainment industries, and software producers;

--  New rules on trade in services;

--  Fairer competition and more open markets in agriculture;

--  Full participation by the developing countries in the global trading 
system;

--  Effective rules on antidumping, subsidies, and import safeguards; 
and 

--  A more effective dispute settlement system.

Reducing Tariff and Non-tariff Barriers to Trade

The eighth round of negotiations under the GATT began at a meeting of 
trade ministers in 1986 in Punta del Este, Uruguay.  Since the 
establishment of the GATT in 1948, international trade negotiations had 
resulted in tariff reductions of about 85%.  However, significant 
barriers remained, especially with regard to agricultural exports, and 
areas such as services were unregulated.

The Uruguay Round resulted in significant reform in the GATT process.  
It achieved a more than one-third across-the-board reduction in tariffs, 
which will be entirely eliminated in some industries.  Just as 
significant as these tariff reductions is that many non-tariff barriers-
-such as quotas, discretionary licensing, import bans, or voluntary 
export restraints--will be eliminated or reduced.  Agriculture export 
subsidies also become subject to constraints.  Under new agriculture 
market access provisions, countries are required to provide a minimum 
level of import access opportunities for certain products, usually set 
at 3% of domestic consumption.  Future multilateral trade negotiations 
will be simplified, since countries will no longer be able to use non-
tariff measures to restrict trade.

Specific Areas of Focus
  
Tariffs.  Previously existing as well as newly established tariffs will 
be "bound."  Once bound, a tariff cannot be increased without 
compensation to other countries.  In addition, all countries are 
required to begin reducing tariffs in 1995, with specific schedules 
established for each member.  For developed countries, tariffs will be 
reduced a minimum of 15% per product line and an overall average of 36% 
over a six-year implementation period.  Developing countries are 
permitted smaller reduction commitments and longer implementation 
periods (10 years to cut tariffs by 24%).  Important gains include 50-
100% cuts in tariffs on electronic items (such as semiconductors and 
computer parts) and harmonization of tariffs in the chemical sector at 
low rates.

Services.  The agreement on trade in services establishes new rules in 
more than 150 service sectors and subsectors (such as advertising, law, 
accounting, information and computer services, environmental services, 
engineering, and tourism), thus enabling U.S. firms operating overseas 
to be treated as fairly as local firms.

Intellectual Property.  The agreement on trade-related intellectual 
property rights establishes improved safeguards to protect intellectual 
property rights.  Computer programs and databases are protected under 
copyright.  Patents for virtually all types of inventions, including 
those in pharmaceuticals and chemicals, are protected for up to 20 
years.

Agriculture.  The agreement on agriculture requires that all members 
reduce aggregate support to their domestic agricultural sectors by 20% 
from a 1986-88 base period.  (The U.S. already has reduced domestic 
support so that further reductions will not be necessary.)  Agricultural 
products, which represent 10% of total U.S. merchandise exports, were 
the second-largest contributor to the overall U.S. trade balance in 
1992.  Since the U.S. is the world's major exporter of agricultural 
products, with a share of world trade averaging about 15% in recent 
years, increased market access and reduced subsidies for agriculture 
will create important opportunities for U.S. producers and exporters.

An agricultural export subsidy agreement specifies reductions in 
spending on export subsidies (36% over six years for developed 
countries, 24% over 20 years for developing countries) and outlaws the 
extension of subsidies to new products not subsidized during a 1986-90 
base period.

An agreement on sanitary and phytosanitary measures establishes a 
scientific standard for measures restricting plant and animal product 
imports on the basis of health or safety concerns, thereby eliminating 
import restrictions based on arbitrary or unsubstantiated health 
concerns.

Environment.  Although environmental issues were not included in the 
original Uruguay Round, the U.S. initiated discussion of the environment 
in the late stages of the negotiations.  The new Committee on Trade and 
Environment in the WTO will review the relationship of economic and 
environmental objectives in trade negotiations. 

Improving Structure And Procedures

Under the Uruguay Round Agreement, the World Trade Organization replaces 
the GATT, with responsibility for enforcing the revised international 
trade rules, providing procedures for negotiating additional reductions 
of trade barriers, and settling disputes arising in areas covered by the 
new trade agreements.  The new dispute settlement process enhances the 
ability of the U.S. to combat unfair trading practices by allowing 
"cross-retaliation" when a country fails to bring its trade measures 
into conformity in response to a dispute settlement decision.

Benefits to the U.S. Economy

Exports.  Exports of goods and services have been steadily rising as a 
share of the U.S. economy's total output.  An increase in U.S. export 
opportunities helps stimulate greater capital investment; technological 
innovation; higher productivity; job growth; and rising living 
standards.  

Export growth is important not only for U.S. export producers but also 
for U.S. industries which provide the intermediate and capital goods 
used by producers of exports as well as the U.S. firms and workers 
supporting the export process.  A large and growing share of the U.S. 
work force depends on U.S. exports for employment.  By 1990, the jobs of 
7.2 million U.S. workers were supported by U.S. merchandise exports, an 
increase of 44% from 5 million in 1986.  

Imports.  The substantial reductions in trade barriers negotiated in the 
Uruguay Round will result in lower prices for imported intermediate and 
final products and a greater variety of goods for American consumers.

Competition in the U.S. market from increased imports stimulates U.S. 
industries to improve their productivity, quality, and technology; this 
can benefit both the firms and U.S. consumers who buy their goods at 
reduced prices. (###)

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U.S. Trade Policy

U.S. trade policy aims to raise standards of living in the U.S. and 
around the world.  Trade accounts for one-quarter of the U.S. gross 
domestic product; for many nations, the figure is much higher.  In a 
changing and more interdependent world, the key to prosperity and 
improved living standards is engagement rather than withdrawal and 
protectionism.  The Administration is committed to harnessing the forces 
of change for the benefit of all Americans, and the people of all 
nations, through reducing trade barriers and promoting sustainable 
development.

When the General Agreement on Tariffs and Trade (GATT) began after World 
War II, it dealt only with tariffs.  Later, the U.S. began to address 
non-tariff barriers to global trade.  Opening new markets is critical to 
fostering global growth and creating jobs both in the United States--
richer countries are able to buy more goods and services from the U.S.--
and abroad.

But sustainable development also is important to such growth, and it has 
both environmental and social dimensions.  As President Clinton 
cautioned in January 1994:

While we continue to tear down anticompetitive practices and other 
barriers to trade, we simply have to ensure that our economic policies 
also protect the environment and the well-being of workers.

More nations are recognizing that economic growth must occur at a rate 
that the environment can sustain.  The U.S. strongly favored the 
establishment of the World Trade Organization's Committee on Trade and 
Environment to discuss, inter alia, the environmental aspects of 
sustainable development.

Another dimension of sustainable development is that a rise in 
productivity should occur in tandem with the growth of middle classes, 
the rise of standards of living, and the improvement of internationally 
recognized labor standards.  Such labor standards include freedom of 
association, freedom to organize and bargain collectively, freedom from 
forced or compulsory labor, a minimum age for the employment of 
children, and conditions of work.

The U.S. supports improved environmental and labor standards; at the 
same time, it will resist efforts to use them as protectionist tools.  

June 7, 1995