General Agreement on Tariffs and Trade 1948
General Agreement on Tariffs and Trade 1948
General Agreement on Tariffs and Trade (GATT). This is a series of multilateral trade agreements aimed at eliminating tariffs between Parties and reducing tariffs. When the 23 Geneva countries signed the GATT in 1947 (effective January 1, 1948), it was considered a tentative agreement until the UN agency replaced GATT. When no such institution emerged, GATT was expanded and further developed in several consecutive negotiations.
It then proved to be the most effective means of liberalising world trade and played an important role in the large-scale expansion of world trade in the second half of the 20th century. When GATT was replaced by the World Trade Organization (WTO) in 1995, 125 countries signed the agreement. It has become a code of conduct governing 90 percent of world trade.
The most important principle of the GATT was non-discriminatory trade in which member states open their markets equally to each other. As stipulated in the unconditional most favored nation treatment clause, this means that once a country and its largest trading partner agree to a tariff reduction, the tariff reduction will be automatically extended to all other GATT member countries.
Meaning that. The GATT contained a long list of specific tariff concessions for each Contracting Party, representing the tariff rates that each country has agreed to extend to other countries. Another basic principle was tariff protection, not import quotas or other quantitative restrictions on trade. GATT systematically tried to eliminate the latter. Other general rules were unified tariff regulations and the obligation for each Contracting Party to negotiate tariff reductions at the request of other Contracting Parties. The escape clause allowed States parties to change the agreement if domestic producers suffered excessive losses due to trade concessions.
GATT’s normal operations negotiated specific trade issues that affect certain commodities and trading countries, but major multilateral trade councils have sought to resolve tariff reductions and other issues. It was held regularly. Seven such “rounds” were held between 1947 and 1993, starting with the one held in Geneva in 1947 (consistent with the signing of the General Agreement). 1949 in Annecy, France. Torquay, England, 1951; and in Geneva in 1956 and 1960-62. The most important rounds were the so-called Kennedy Round (1964–67), the Tokyo Round (1973–79) and the Uruguay Round (1986–94), all of which took place in Geneva.
These agreements have reduced the average tariffs on industrial products around the world from 40% of the market value in 1947 to less than 5% in 1993. Global trade agreements have included groundbreaking new agreements on trade in services, reducing tariffs on industrial products by an average of 40%, reducing agricultural subsidies at the end of the round. The Convention has also created the WTO, a new and powerful global organisation for monitoring and regulating international trade. GATT expired with the official signing of the Uruguay Round on April 15, 1994. Many trade agreements signed under that principle and sponsorship have been adopted by the WTO.
SEE ALSO:
Congressional Regulation of Commerce (1824);
The Interstate Commerce Act (1887).
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