ABSTRACT
For a long time, under the General Agreement on Tariffs and Trade (GATT) regime, most developing economies kept themselves away from participation during negotiations in the multilateral trade negotiations (MTNs). During the early phase, developing economies were interested only in obtaining preferential access to industrial country markets. They were passive participants in the MTNs and their participation in the global economy was also limited. Virtually all liberalization commitments in the Kennedy and Tokyo Rounds were made by industrial economies. Developing countries enjoyed a “free ride” because under the most-favored-nation (MFN) clause of the GATT Article I, a tariff reduction granted to one trading partner had to be granted to all the contracting parties of the GATT. The dark side of the “free ride” was that it encouraged the industrial economies to leave the sectors of greatest significance out of the MTNs. This is how textiles and apparel and agriculture, the sectors in which developing economies had the greatest export potential, were protected in the industrial economies through the GATTsanctioned Multifiber Arrangement (MFA),1 which is known to be highly distortionary.
