GATT Full Form-General Agreement on Tariffs and Trade

Introduction

The General Agreement on Tariffs and Trade (GATT), established in 1947, was a landmark international trade agreement aimed at promoting global trade liberalization by reducing tariffs and other trade barriers. It laid the foundation for the modern global trading system and was succeeded by the World Trade Organization (WTO) in 1995. GATT regulated international trade, fostering negotiations among member countries, expanding global commerce, and contributing to post-war economic recovery and growth.

Objectives of GATT

• Reduce Tariffs and Trade Barriers: Lower customs duties to encourage international trade.
• Promote Non-Discrimination: Ensure equal treatment via the Most-Favored-Nation (MFN) principle.
• Prevent Unfair Trade Practices: Establish rules against dumping and unfair subsidies.
• Encourage Economic Growth: Foster global development through expanded trade opportunities.
• Resolve Trade Disputes: Provide a framework for settling international trade disagreements.

Key Principles of GATT

• Most-Favored-Nation (MFN) Treatment: Equal trade advantages for all GATT members, preventing discriminatory policies.
• National Treatment: Equal treatment of imported and domestic goods in a country’s market.
• Tariff Reductions through Negotiations: Gradual lowering of tariffs via multilateral talks.
• Elimination of Quotas and Trade Restrictions: Discouraging quantitative restrictions like import quotas, except in specific cases.

Rounds of Negotiations under GATT

• Geneva Round (1947): Initiated the first tariff reductions.
• Kennedy Round (1964-1967): Focused on tariff cuts and anti-dumping measures.
• Tokyo Round (1973-1979): Addressed subsidies and technical barriers beyond tariffs.
• Uruguay Round (1986-1994): Led to the creation of the WTO in 1995.

Impact of GATT on Global Trade

• Expanded Global Trade: Lowered trade barriers, increasing international commerce.
• Boosted Economic Growth: Encouraged investment and industrial expansion.
• Standardized Trade Practices: Provided a structured framework for trade agreements.
• Led to WTO Formation: Its principles shaped the WTO for a comprehensive trade system.

Challenges and Limitations of GATT

• Limited Scope: Focused on goods, excluding services and intellectual property.
• Weak Dispute Resolution: Lacked strong enforcement compared to the WTO.
• Favored Developed Nations: Developing countries struggled to compete under reduced tariffs.
• Non-Tariff Barriers: Less effective in addressing issues like environmental and labor standards.

Transition from GATT to WTO

The Uruguay Round led to the establishment of the WTO in 1995, replacing GATT. The WTO expanded trade rules to include services, intellectual property, and introduced stronger dispute resolution mechanisms, building on GATT’s foundation.

The General Agreement on Tariffs and Trade (GATT) was instrumental in shaping modern global commerce. By reducing tariffs and promoting free trade, it facilitated economic growth and paved the way for the WTO. Despite its limitations, GATT’s influence on the international trading system remains profound.

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