About the General Agreement on Tariffs and Trade (GATT)
Originating as a multilateral agreement to reduce trade barriers after the devastation of World War II, the General Agreement on Tariffs and Trade (GATT) was established in 1947. Its primary focus was to enhance economic recovery through international trade liberalization, including the reduction of tariffs, quotas, and subsidies. Marked by several negotiating rounds aimed at decreasing restrictions, GATT facilitated a freer flow of trade worldwide, setting the stage for the eventual emergence of the World Trade Organization (WTO) in 1995.
The Transition to WTO and Legacy of GATT
By integrating GATT’s frameworks, the WTO expanded on its precursor’s goals by encompassing a broader array of trade issues and ensuring better compliance through more robust dispute resolution mechanisms. The legacy of GATT is particularly eminent in today’s trade policies, impacting how nations negotiate trade agreements and resolve international economic disputes.
Evolution Through Rounds of Negotiations
GATT’s history is characterized by a series of negotiation rounds, beginning in Geneva (1947) and concluding with the Uruguay Round (1986-1994). These discussions successively lowered tariffs and addressed other trade barriers, with each round refining the system and expanding on liberalization measures.
Principle of Non-Discrimination
A key principle established by GATT, carried into the WTO, is the most-favored-nation (MFN) status, which prevents discrimination between trading partners. If a country improves benefits (such as reducing tariffs) given to one trade partner, these benefits must be extended to all members. This principle is crucial for maintaining fairness and equality in global trade practices.
Related Terms
- Most-Favored-Nation Status: Ensuring non-discriminatory trade among countries.
- Tariffs: Taxes imposed on imported goods, often discussed in the context of GATT negotiations.
- Quotas: Specific limits on the quantity of goods that can be imported or exported.
- Subsidies: Government actions that financially assist a sector, affecting international trade dynamics.
Suggested Further Reading
- Clashing over Commerce: A History of US Trade Policy by Douglas A. Irwin – This book provides insight into how trade policies, including those under GATT, have shaped modern economic landscapes.
- The World Trading System: Law and Policy of International Economic Relations by John H. Jackson – An exploration of the international trading system, focusing extensively on GATT’s role and evolution into the WTO.
In conclusion, the saga of GATT is not just about reducing tariffs or handling quotas; it’s a captivating tale of how nations can come together for a common economic cause. Through its protocols and negotiations, GATT laid down the foundational principles of modern international trade that continue to govern global economics.
