a view to reducing custom tariffs. the gatt was signed in 1948 and, as the negotiation process to create the ito ultimately failed, became the only multilateral instrument to govern world trade until the wto was created in 1995. 4. under the gatt, disputes were initially settled by a ruling by the chair. a working party was later established to consider the matter and advise the contracting parties. finally, a more formal system involving a three - person “ panel ” was established. this concept was subsequently incorporated into the wto. for more details, see mcrae, d. m. ( 2021 ), “ general agreement on tariffs and trade ”, united nations audiovisual library of international law, june. 5. world economic forum ( 2019 ), “ a brief history of globalization ”, 17 january. 6. the fact that the number of members has increased from the 23 signatories of the gatt to the 164 members of the wto is in itself an indication that free trade is appealing. 7. for example, in the uruguay round, which was concluded in 1995, developed countries cut their tariffs on industrial products by 40 %, from an average of 6. 3 % to 3. 8 %, to be phased in over a five - year period. moreover, the value of imported industrial products that receive duty - free treatment in developed countries jumped from 20 % to 44 %. for more information, see world trade organization, “ tariffs : more bindings and closer to zero ”. 8. work stream on globalisation ( 2021 ), “ the implications of globalisation for the ecb monetary policy strategy ”, occasional paper series, no 263, ecb, september. 9. for an analysis of the eu ’ s economic interdependencies, the open strategic autonomy agenda and the potential implications from a central banking perspective, see international relations committee work stream on open strategic autonomy ( 2023 ), “ the eu ’ s open strategic autonomy from a central banking perspective – challenges to the monetary policy landscape from a changing geopolitical environment ”, occasional paper series, no 311, ecb, march. 10. as per campos r., estefania - flores, j., furceri, d. and timini, j. ( 2022 ), “ trade fragmentation ”, working papers, banco de espana, simulations by eurosystem staff that divide the world into three trading blocs – eastern, western and neutral – show that a

states. but again it is the persistence of these differences which is the european characteristic. that is the reason why when we observe a ) that unit labour costs – which is the major cost parameter for inflation – are augmenting in a country, year after year, and that they are above the average of the euro area, and b ) that the level of cost competitiveness of the economy concerned is starting to create difficulties, for instance that the external account is deteriorating vis - a - vis the average of the euro area, then it is time, in our opinion, to take appropriate measures to bring the unit labour costs below the average and catch up on the lost competitiveness. 5 ) at governing council meetings, have you discussed the situation in countries like portugal and italy – with high levels of debt and very low growth – or the netherlands and finland – with low inflation? answer : just like the federal reserve, we have to look at the average of our vast continent. and we are responsible for price stability in the euro area in terms of the average inflation for our 313 million fellow citizens of the euro area. but the countries concerned are responsible for the differential between their country ’ s inflation and the average. and we examine as carefully as possible the evolutions and relationships inside the euro area. 6 ) which measures would improve competitiveness in the euro area, and specifically in italy and portugal? maybe, for instance, cuts in labour and / or administrative costs? answer : it is important, not only for italy and portugal, but for all economies of the euro area, to have a good understanding and a very attentive examination of the evolution of their own cost competitiveness, of their labour costs including their labour productivity progress, in order to be able to take if and where necessary the appropriate measures to regain lost competitiveness if there is a documented loss of it. structural reforms are equally of the essence to foster competitiveness. 7 ) how do you permit unit labour costs to move at a speed which will make it possible to catch up on lost competitiveness? answer : labour productivity is certainly decisive. in this domain structural reforms make it possible to extract improvements from new technologies and processes. it is equally important to improve unit labour costs through moderation in nominal wages. 8 ) the german chancellor angela merkel has dealt with the budget deficit through tax increases. should other countries follow suit? answer : what counts is the final goal, which is the rigorous implementation of the stability and growth pact.