The free movement of goods and services has been the exception rather than the norm among states. Countries have regulated international trade through a number of tariff and nontariff barriers. Every country has enacted its share of tariff and nontariff barriers that put restrictions on foreign imports, thereby making foreign products more expensive than domestic products. These rules have acted as a barrier to trade and have limited the choices available to the ultimate consumer.
Ideas of liberalism that free trade should be pursued for the benefit of the ultimate consumer through the gradual elimination of tariff and nontariff barriers launched the negotiations in 1946 for the development of an International Trade Organization. Eventually countries adopted a milder version of a General Agreement on Tariffs and Trade (GATT). GATT acted as a legal agreement/ quasi-legal institution for the regulation of international trade with the ultimate goal of bringing down the barriers to trade.
In 1994 the World Trade Organization came into effect after multiple years of negotiations. The WTO manages a number of treaties that aim at trade liberalization including the GATT, the General Agreement on Trade in Services (GATS), an Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), an Agreement on Sanitary and Phytosanitary Measures (SPS) and an Understanding on the Rules and Procedures Governing the Settlement of Disputes (DSU). These agreements entered into force in 1995.
Since its inception the WTO has dealt with a variety of environmental regulations that could become an impediment to free trade. For instance, a country may refuse to import a good produced in another country because the production of such a good involved materials (i.e. chemicals) outlawed in the importing country in order to ensure public health. The WTO is called upon in such circumstances to decide whether the importing country is genuinely concerned about the health of its population or whether the restriction imposed is in essence a barrier to trade with the ultimate goal to protect the domestic industry.
A Trade-Related Intellectual Property Rights (TRIPs) Agreement was adopted as part of the package deal during the negotiations that led to the establishment of the WTO. The purpose of the TRIPs Agreement is to ensure that the high level of protection granted to intellectual property holders, through international conventions, is guaranteed in the international trade system.
Developing countries are apprehensive of the impacts of intellectual property rights on their nascent economic development. Many developing countries are fully aware that without what is called ‘piracy’ in the developed world, many products such as life-saving pharmaceuticals or software or improved seed varieties would be economically prohibitive for their citizens.