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

would lead to sizeable losses in both global trade and welfare. [ 10 ] the eu thus needs to continue working towards safeguarding trade openness while increasing its own resilience to fragmentation. the changing nature of globalisation so far, the levelling - off of global trade in goods since the great financial crisis can be characterised as a phase of “ slowbalisation ” rather than “ deglobalisation ”. [ 11 ] in the services sector, the growth of international trade seems to be signalling a continuation of globalisation trends driven by technological progress. overall, aggregate data do not point towards deglobalisation, at least not for now. at the same time, the nature of globalisation may be changing. firms are becoming more inclined towards nearshoring, onshoring or friend - shoring their supply chains, especially for the production of advanced technologies ( chart 3 ). chart 3 incidence of terms related to supply - chain reshoring in firms ’ earnings calls by sector ( standard deviations away from the average number of mentions ) sources : nl analytics and ecb staff calculations. notes : the index captures the exposure ( average number of mentions ) of terms related to nearshoring, onshoring and friend - shoring in the transcripts of individual firms ’ earnings calls. global firms are considered, of which 50 % are us firms and 23 % are eu firms, based on the country of incorporation, if available. ten sectors are considered : academic and educational services, basic materials, consumer cyclical goods, consumer non - cyclical goods, energy, financials, healthcare, technology, real estate, and utilities. the latest observations are for the fourth quarter of 2022. moreover, foreign direct investment in strategic sectors is becoming more fragmented, primarily to the detriment of asian countries. [ 14 ] for instance, large us chip companies are showing a long - term commitment to moving their manufacturing plants back to the united states, also in response to the us chips and science act. [ 15 ] these pledges mark a significant shift in the ability of us industry to manufacture semiconductors after two decades of dependence on offshore production. implications for the eu economy and the ecb ’ s monetary policy this new state of affairs poses challenges for the eu economy and the ecb ’ s monetary policy. weaker trade integration could significantly reduce welfare because our economy is one of the most open and outward - oriented large economies. its interdependencies could therefore turn