The Embedded Liberalism Compromise in the Making of the GATT and Uruguay Round Agreements

Chapter 2 provides an historical analysis of the Embedded Liberalism Compromise struck by the negotiators of the GATT, and of the way in which the GATT coupled stability mechanisms with the reduction of trade barriers. Lewis identifies the structural and textual features of the GATT Agreements that represented a commitment to the notion of compromise, including procedural and substantive provisions in the GATT text. Lewis then considers whether it is appropriate to continue applying the term ‘Embedded Liberalism Compromise’ to the contemporary environment. While interest in balancing trade and non-trade objectives has remained constant, there has been significant change in approach throughout subsequent trade rounds. The Tokyo Round referred to shielding the world economy from shocks and imbalances and to the need for ‘orderly conditions’, while the Uruguay Round saw reduced domestic policy space through new trade law agreements. Lewis also notes that the contemporary proliferation of preferential trade agreements further undermines a notion of a continuing Compromise. Notwithstanding, Lewis concludes that a form of the Compromise remains and is evident in the WTO’s 2015 Nairobi Package and in carveouts in preferential agreements such as the Trans Pacific Partnership Agreement. A form of the Compromise continues, albeit a different one from Ruggie’s original conception.