Introduction

Trade issues are rarely discussed in isolation from other policy issues. The conference that led to the adoption of the Havana Charter for an International Trade Organization was the United Nations Conference on Trade and Employment. The Charter assigned to the stillborn Organization the task of resolving the most pressing economic problems of the late 1940s. It was to work towards full employment and the removal of balance of payments disequilibria of its Members, take action against inflationary or deflationary pressures, and promote fair labor standards. Its Members would have been committed to cooperating in the fields of economic development and reconstruction. And the Organization was to be the forum for negotiating agreements on technology transfer, foreign investment, double taxation, and restrictive business practices, as well as commodity agreements.

The central theme of international economic diplomacy in the 1960s and 1970s was the economic development of the third world, and the GATT's legal regime was gradually adapted between 1965 and 1980 to serve as an instrument of development policy: the principle of non-reciprocity in trade negotiations between developed and developing countries was recognized; developed countries were permitted to accord tariff preferences to developing countries; and developing countries were accorded the right to exchange preferences among themselves in the name of collective autonomy.

The voluntary nature of the preferences accorded to the developing countries induced some developed countries to link the granting of preferences to other policy issues.