Economic sphere

The Atlantic Charter of 1941 by the United States and the United Kingdom as a rallying cry for nations opposing Germany Italy and Japan called for the renunciation of territorial expansionism disarmament of aggressor states and set out goals for the post-war era based on international economic cooperation. These included the principle that nations should have the right to expect that the legitimate trade would not be diverted or diminished by excessive tariffs quotas, restrictive unilateral or bilateral practices.

The negotiators at the United Nations monetary and finance conference in Bretton Woods in 1944 sought to create a system to promote world trade and multilateral economic cooperation. It was originally planned that the Bretton Woods system would have three major international organisations, the International Monetary Fund, the International Bank for Reconstruction and Development (World Bank) and the International Trade Organisation.

The International Monetary Fund was to ensure monetary stability and currency exchange. The World Bank was to assist war-torn and developing countries in reconstructing and developing their economies. The International Trade Organisation was to develop and administer a code of conduct for world trade dealing with tariffs and trade barriers, employment, economic development and restrictive business practices.


Although the US government strongly advocated the International Trade Organisation and produced a suggested charter in 1946, it did not come into being as it could not be ratified by the U.S. Congress. Instead, the developed market economies entered into the General Agreement on Tariffs and Trade (the GATT) which was based in large part on the failed ITO charter.

GATT was a multilateral treaty under which the participating states were to negotiate a substantial reduction in customs tariffs and other impediments to trade. It provided a baseline of principles which apply to all members. The key principles were

  • the principle prohibiting discrimination in relation to foreign trade requiring each member state to accord the same trading privileges and benefits to all other contracting states equally (most-favoured-nation status),
  • the principle that foreign goods are to be treated the same as national goods (once applicable tariffs et cetera paid) (the national treatment principle)
  • the principle that states can levy only certain types of charges and levies on foreign goods (tariffs only)
  • the principle that trade regulation should be transparent published and available to other contracting states
  • the principle that states could and should enter customs unions and free-trade agreements between themselves for further liberalising trade provided they did not, overall, discriminate against third-party states that were also members of GATT


The GATT agreement was ultimately incorporated into the World Trade Organisation agreement in 1994, when that the originally intended architecture and supranational organisation came into being

The World Trade Organisation now includes almost all countries either directly or as observers. China joined in 2001 and Russia joined in 2012, each after a long accession process. The EU member states are also members of the WTO, and the EU participates on behalf of its member states in those areas of trade where it has exclusive or shared competence with the states/

The World Trade Organisation rules are a baseline minimum set of trading rules which apply when there is no bilateral or regional agreement between states for better terms. Most trade agreements adopt templates precedence and principles reflected in the WTO rules and institutions. The WTO rules positively encourage regional trade agreements and free-trade agreements and areas.

GATT and later the WTO has provided a framework for the negotiation of tariff reductions on a multilateral basis. Successive rounds of negotiations from the 1950s through to the 1990s have progressively reduced customs tariffs to relatively low levels on most goods in most sectors.

The principal multilateral trade agreements are binding on all members including the agreements on trade in goods (including GATT 1994) the general agreement on trade in services, the agreement on rules and procedures governing the settlement of disputes, the agreement on trade-related aspects of intellectual property rights and the trade policy review mechanism. The terms agreed by each state are set out in their schedules which set out the extent of their commitment. The commitments in the area of services and much more restrictive and selective than those in the area of goods.

Regional Agreements

Progress on further multilateral reductions between all members has stalled in the last decade. Further progress in tariff reduction has come principally at the level of bilateral or regional trade agreements.

Examples of free-trade areas include the Association of Southeast Asian Nations free-trade agreement (ASEAN FTA) European free trade Association (EFTA) the North American Free Trade Agreement (NAFTA) the southern cone common market (MERCOSUR).

Examples of customs union include the Andean common market established in 1993 (ANCOM) the central American common market (CACM) established in 1997 and the common market for eastern and southern Africa (COMESA)  established in 198, the economic community of Central African States (ECCAS) established in 1981 and the economic community of West African States (ECOWAS)

The WTO is often mentioned in the context of a hard Brexit as providing a basic floor of rights for EU/UK trade in the event of an exit from the EU without a trade agreement. As with other trade agreements worldwide, the WTO principles templates and mechanisms are likely to be a central part of the EU UK future relationship agreement.

The OEEC and the OECD

The United States, through Marshall aid, gave considerable assistance in the reconstruction of Western Europe and the Western European economies. The organisation for European Economic Co-operation was established in 1948 to administer Marshall aid. The founding members included the United States and Canada as well as Ireland, the United Kingdom, most other western European states together with Turkey and Greece.

The OECD is an intergovernmental body without supranational institutions. Decisions of the Council of ministers required unanimity. France had sought a greater degree of supranational decision-making.

In addition to the distribution of Marshall Aid, the OEEC had the objective of advancing European economic integration. It aimed to lower trade barriers and to study the feasibility of a European customs union. Ultimately the OECD failed or make much progress towards a customs union largely because the common commercial policy required, was unacceptable to many members.

The OEEC succeeded in restoring multilateral trade within Europe. It required that currencies should be freely convertible at least to the extent required to facilitate trade and trade transactions. The European Payments Union was formed in this context.

The OEEC made some progress in removing trade barriers amongst members, including the reduction of quotas.

With its original remit effectively complete at the end of the 1950s it was reconstituted as the Organisation for Economic Cooperation and Development (the OECD) in 1961 and quickly brought in other developed countries outside Europe as members including Japan, Australia and New Zealand

The OECD remains an important international organisation in the sphere of economics and taxation. It publishes books, reports statistics and reference material including economic reviews and outlooks for its member countries.

It publishes and updates model tax conventions which are used as a template for allocating taxation rates between countries. These templates which are not legally binding rules in themselves are embodied in double taxation treaties, and other tax cooperation agreements entered between states. They are not affected by Brexit.

Security and Defence

The North Atlantic Treaty was signed in 1949 and led to the creation of the North Atlantic Treaty Organisation (NATO) in 1950. The members of the Treaty of Brussels transferred their headquarters personnel and plans to NATO. NATO supreme headquarters Allied Powers Europe took over responsibility for the defence of Western Europe.

The establishment of NATO as well as the treaties establishing the organisation for European Economic Cooperation which provided for the Council of Europe and European Coal and Steel Community eventually eclipsed the Western Union.

The continuing Cold War and the Korean War prompted the United States to favour German re-armament within NATO. The French government put forward an 11-point plan for a common European army under supranational command. It proposed a European Defence Community similar supranational institution to those of the ECSC.

The UK did not wish to join because of supranational control but was supportive. The Netherlands would not join the UK being involved. The UK agreed that it would enter a mutual defence agreement, and, on this basis, European Defence Community treaty and the UK EDC treaty was established together in 1952. The French National Assembly failed to ratify the EDC.

There was a desire to include Italy and Germany in the Western European defence arrangements. The Western Union founding treaty was amended at the 1954 Paris conference after the failure of the treaty establishing the European Defence Community to obtain French approval. This had been a pre-requisite of the 1952 treaty ending Allied occupation of Germany.

A modified Brussels Treaty transformed the Western Union into the Western European Union, and Italy and Germany were admitted and led to the end of the occupation of Germany. Social and cultural elements were transferred to the Council of Europe to avoid duplication.

The Council of Europe

The Council of Europe was formed in 1949 and is distinct from the European Union. There is a European assembly and ministerial committee. The committee makes decisions on the basis of unanimity. The role of the assembly is consultative only.

The Council of Europe does not make binding laws but has the power to enforce international agreements reached by European states on various topics. The best-known body of the Council is the European Court of Human Rights which enforces the European Convention on Human rights made in 1950.

The council has two statutory bodies, the committee of ministers comprising the foreign ministers of each state and a Parliamentary assembly composed of members of the national parliaments of the states. The Commission for Human Rights is an independent institution within the Council which is mandated to promote awareness of and respect for human rights in the member states. The secretary-general heads the Secretariat of the organisation.

The original members were the Western European states, including the United Kingdom and Ireland together with Greece and Turkey. After the fall of communism in Eastern Europe most former Communist bloc countries including Russia, Armenia and Azerbaijan joined the Council of Europe and acceded to the European Convention on Human Rights.

The Convention on Human Rights in the UK

The Labour government gave effect in United Kingdom domestic law to the Convention in the human rights act 1998. The application of the act to Northern Ireland was part of the human rights guarantees in the Good Friday/Belfast agreement. Ireland also made the European Convention on human rights part of its domestic law pursuant to that agreement so that the same human rights principles would apply on an all-island basis. Its guarantees stand side-by-side with the Irish constitutional guarantees.

Although a level of frustration with decisions both of the European courts and UK domestic reports under the European Convention on human rights, particularly in the areas of immigration and asylum may have played some part in the Brexit referendum, the UK has not repealed the human rights act (nor would be likely even if it did so to leave the Council of Europe or renounced European Convention on human rights).

Initiatives and proposals have been put forward at governmental level for a new British Bill of Rights to replace the European Convention on human rights in UK domestic law. It was proposed by David Cameron before the 2010 general election and was part of the 2015 Conservative manifesto. Although the Conservatives won a majority in the 2015 election, it appears to have been shelved because of Brexit. The proposal may reappear later.

As with Brexit special provisions may be required to maintain the Human Rights act in Northern Ireland as its incorporation in domestic law is required by the Good Friday/Belfast agreement.

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