Bread lines and bomb craters. Scan the world today and you will see far fewer of each than a half century ago, when the modern world trading system was taking shape. Yet, it was these grim images from the 1930s and '40s that propelled 22 countries in 1948 to sign an obscure text called the General Agreement on Tariffs and Trade. As it celebrates its 50th anniversary this year, GATT and its progeny can safely be called the most successful economic experiment the world has ever tried.
GATT, today reincarnated as the World Trade Organization, has never had the lofty profile of, say, the United Nations or even the World Bank, two other institutions born in the postwar era. Yet, GATT has had more success in achieving its mission: enriching nations - and binding them together - through trade.Fifty years on, the expansion of trade, most of it under GATT rules, has been phenomenal. Between 1948 and 1997, world production of goods increased 5 1/2 fold, yet trade expanded 14 fold. Tariffs, on average, have fallen from more than 40 percent to less than 4 percent. Rich countries have gotten richer by trading, but so have developing nations. During this decade, emerging economies have grown at a head-turning rate of 5.4 percent on average, much of that trade-driven.
GATT's founders understood this potential. Even before the 1940s, U.S. officials could see the damage wrought by the 1930 Smoot-Hawley Act, which pushed U.S. import duties sky-high and deepened the Great Depression. This, in turn, led to similar actions by other countries, collapsing trade.
Lessons from World War II only reinforced the need for more trade and closer economic ties. It was clear, for example, that the more countries traded with one another, the less willing they would be to fight. Cordell Hull, the U.S. secretary of state at the time, put it best: ''Unhampered trade dovetails with peace; high tariffs, trade barriers and unfair economic competition, with war.''
Why has GATT - and now, the WTO - succeeded so well? In part, because it is based on clear, enforceable rules. While politics will always be a factor when countries face off, this has been less true on trade, where GATT spells out a nation's obligations, enforced by dispute panels. In 1996, for example, Costa Rica protested U.S textile tariffs, brought a case to the WTO, and won. Where else can small countries take on a superpower and prevail?
GATT and the WTO also have succeeded because of a growing consensus that trade enriches countries. Few developing nations joined GATT in its early years, but as it became clear that the fastest-growing countries were also the busiest traders, membership surged. Today, GATT has 132 members, and 31 others are clamoring to get in.
As important as it has been, the WTO could actually become a bigger force over the next decade. As tariffs and quotas disappear, the WTO is becoming more involved in domestic issues that influence trade but go beyond it. A WTO dispute panel, for example, hired outside scientists recently to evaluate the European Union's assertion that hormones in U.S. beef posed a health threat. Such cases have made the WTO more of a political target, and it will have to tread carefully as it moves into areas like the environment and antitrust.
The one enduring feature of GATT and the WTO has been its guardian angel, the United States. It is ironic, then, that as the trading system prepares for its birthday celebration this May in Geneva, the United States is without the authority to negotiate new trade agreements, the result of carelessness and indifference by the president and Congress.
The WTO has succeeded against long odds. Few in the late 1940s thought trade quotas would disappear; even fewer in the 1980s thought protected farm trade could be disciplined by global rules. The WTO has endured because it is rooted in the belief that equal opportunity and open markets are the basis for a sound economy. Those ideas are as compelling today as they were in 1948.