ABSTRACT
In the 1950s, the General Agreement on Tariffs and Trade (GATT) disputes procedure developed from the ‘nullification and impairment clause’ in the proposed legal system for the International Trade Organisation (ITO), which you will recall from Chapter 3 did not eventuate (see pp 13-14, above). It dealt with government measures outside GATT which removed the commercial benefits expected to flow from tariff concessions. The clause applied to any action that ‘nullified’ or ‘impaired’ the objects of the agreement. Despite the GATT’s appearance of being less formal than a legal system, it had coercive force. Once a judgment was passed, normative pressure was placed on the relevant government to alter its measures; if this failed, economic sanctions would be exacted.
