1. Protectionism:
Protectionist sentiment started taking deeper roots in some of the developed countries including USA. These countries adopted some unilateral protectionist and legislative measures which went against their own proclaimed philosophy of free and fair world trade.
For example, there was the Omnibus Trade and Competitiveness Act of 1988 with the “Super 301” provision. In May 1989, US named Japan, Brazil and India as the most unfair traders. India was named because of its restrictions on foreign investments and curbs on foreign insurance companies.
2. Demand for Reciprocal Concessions:
Developed countries started demanding reciprocal tariff and non-tariff concessions from the developing countries under various arguments.
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3. Exemptions from GATT Rules:
US were able to get an exemption from the application of GATT rules to its agricultural policies and trade in agricultural goods. US made an intensive use of this exemption. It erected a system of extensive farm subsidies with multiple effects’.
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Its policy led to a huge surplus of farm products which, in turn, dampened prices in the world markets and inflicted a good deal of suffering upon farmers in developing countries.
Several European countries also entered into what is termed Common Agricultural Policy featuring huge farm subsidies and resulting in large scale excess supply of farm produce.
4. Trading Blocs:
An ever-increasing number of regional trading blocs came into existence.
5. Negotiating Tactics:
Developed countries perfected their strategy of dividing developing countries and luring some of them to their point of view by offering, on the sideline, specific concessions.
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Similarly, while they themselves possessed adequate negotiating staff, vast knowledge and negotiating skills, they used the technique of burdening the negotiators of developing countries with a load of too many problems and issues.
The negotiators of developing countries could not handle this load effectively, particularly when it included new items of negotiations. Consequently, they lost in negotiations by not realising their implications.
These developments deeply affected the contents and issues discussed at the Eighth Round (Uruguay Round) of GATT which resulted in scrapping of GATT and replacing it with WTO with a much wider coverage and controversial issues.