INTERNATIONAL TRADE ORGANIZATION
Prior to WORLD WAR II, many countries
employed “beggar thy neighbor” trade policies,
raising tariffs and instituting non-tariff barriers
that impeded imports in an attempt to reduce
unemployment and increase domestic output.
However, other countries retaliated by raising
their own barriers against imports. This resulted
in reducing export markets, which then only
worsened the already poor economic conditions.
The problems created by such policies led United
States to propose that a new international trade
organization be established to regulate trade poli-
cies and settle disputes between trading partners.
Under the U.S. proposal, the International Trade
Organization (ITO) was to be a specialized
agency of the UNITED NATIONS and was to have
several broad functions: promoting the growth of
trade by eliminating or reducing tariffs or other
barriers to trade; regulating restrictive business
practices hampering trade; regulating interna-
tional commodity agreements; assisting eco-
nomic development and reconstruction; and
settling disputes among member nations regard-
ing harmful trade policies. Negotiations to estab-
lish the ITO began in Geneva, Switzerland, in
1947, with a more complete charter being drafted
later in Havana, Cuba. Opposition to the charter
of the ITO soon emerged, especially in the U.S.
Congress. Subsequently, President HARRY TRU-
MAN’s administration withdrew its support for the ITO, and interest in the ITO faded. The void
left by the collapse of the ITO has been filled by
other institutions, like the GENERAL AGREEMENT
ON TARIFFS AND TRADE (GATT), the WORLD
BANK, and the United Nations Conference on
