What is the General Agreement on Tariffs and Trade (GATT)?
The General Agreement on Tariffs and Trade (GATT) was established in 1947 and served as a multilateral agreement regulating international trade. Its intent was to reduce tariffs and other trade barriers to promote the smooth flow of goods between countries. This agreement laid the foundation for successor accords and institutions such as the World Trade Organization (WTO), which aimed to oversee and develop the rules of international trade.
Key Features of GATT
- Reduction of Tariffs: One of the primary goals was the continuous reduction of tariffs and other trade barriers.
- Trade Liberalization: Promoted trade liberalization and fair competition.
- Non-Discrimination: Introduced the Most Favored Nation (MFN) principle where member countries could not discriminate between their trading partners.
- Trade Rounds: Encouraged ongoing rounds of negotiations to further reduce trade barriers.
- Dispute Resolution: Provided mechanisms for the resolution of trade disputes between member countries.
Examples of GATT in Action
- Kennedy Round (1964-1967): Focused on reducing tariffs and introducing anti-dumping measures.
- Tokyo Round (1973-1979): Addressed non-tariff barriers to trade, including issues like subsidies and government procurement.
- Uruguay Round (1986-1994): Led to the creation of the WTO and covered a wider array of topics including services, intellectual property, and agriculture.
Frequently Asked Questions (FAQs)
What is the purpose of GATT?
The purpose of GATT was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas, thereby increasing economic cooperation and development.
How does GATT differ from the WTO?
GATT was an ad-hoc agreement with limited institutional framework, while the WTO is a full-fledged international organization with a wider mandate, covering more sectors and with more robust enforcement mechanisms.
Is GATT still in effect?
No, GATT itself has been replaced by the WTO in 1995, but its core principles and agreements have been incorporated into the WTO’s agreements and practices.
What are some of the key principles of GATT?
Key principles of GATT include non-discrimination (Most Favored Nation treatment), protection through tariffs over other means, and promoting freer trade by negotiating trade rounds.
How did GATT affect global trade?
GATT substantially reduced tariffs and increased the volume of international trade through its rounds of negotiations and agreements.
Related Terms
- World Trade Organization (WTO): An international organization established in 1995 that oversees global trade rules among nations.
- Most Favored Nation (MFN): A principle ensuring that any trade advantage or privilege that one country gives to another must be extended to all other WTO members.
- Tariff: A tax imposed by a government on imports or exports of goods.
- Trade Barrier: Government policies or regulations that restrict international trade.
- Non-Tariff Barriers: Forms of restrictive regulations and directives other than tariffs, such as quotas, embargoes, sanctions, and levies.
Online Resources
Suggested Books for Further Studies
- “The World Trading System: Law and Policy of International Economic Relations” by John H. Jackson
- “The GATT/WTO System and the Regulation of International Trade” by E.-U. Petersmann
- “The Trading System: Law and Practice of International Trade” by Raj Bhala
Accounting Basics: “General Agreement on Tariffs and Trade (GATT)” Fundamentals Quiz
Thank you for exploring the comprehensive details about the General Agreement on Tariffs and Trade (GATT) and testing your understanding with our quiz. Continue to broaden your knowledge in the field of international trade and economics!
