General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) was first signed in 1947.

Was designed
To provide an international forum That encouraged free trade between member states By regulating and reducing tariffs on traded goods Providing a common mechanism for resolving trade disputes.

GATT ???
A Treaty, not an Organization
Was the outcome of the failure of negotiating governments to create the ITO
The Bretton Woods Conference introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions

Once the ITO failed in 1950, only the GATT agreement was left.

Objective
The GATT's main objective was the

Reduction of Barriers to International Trade

This was achieved through the Reduction of Tariff barriers Quantitative Restrictions Subsidies on trade through a series of agreements

History
3 Phases
First Phase , from 1947 until the Torquay Round
A second phase, encompassing three rounds, from 1959 to 1979

The Third phase, consisting only of the Uruguay

Round from 1986 to 1994

First Phase
Commodities which would be covered by the agreement and freezing existing tariff levels
Year 1947 1949 Place/name Geneva Annecy Subjects covered Tariffs Tariffs

1951

Torquay

Tariffs

Second Phase
Focused on reducing tariffs

Year
1960-1961 1964-1967

Place/name
Geneva Dillon Round Geneva Kennedy Round Geneva Tokyo Round

Subjects covered
Tariffs Tariffs and anti-dumping measures Tariffs, non-tariff measures, framework agreements

1973-1979

Third Phase
Extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born.

Year

Place/name

Subjects covered

1986-1994

Geneva Uruguay Round

Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc

ROUNDS
NAME
1.GENEVA

START APRIL 1947

DURAT COUNTR SUB. ION IES COVERED

7 MONTHS

ACHIVEMENTS
SIGNING OF GATT, 45,000 TARIFF CONCESSIONS AFFECTING $10 BILLION OF TRADE.

23

TARIFFS

2. ANNECY APRIL 1949

5 MONTHS

13

TARIFFS

COUNTRIES EXCHANGED SOME 5000 TARIFF CONCESSIONS.

ROUNDS CONT
NAME
3. TORQUAY

START
SEPT. 1950

DURATIO COUNT N RIES

8 MONTHS

SUB. COVERED TARIFFS

ACHEVEMENTS
COUNTRIES EXCHANGED SOME 8700 TARIFF CONCESSIONS,

38

CUTTING THE
TARIFFS BY 25% 4. GENEVA II JAN. 1956 5 MONTHS

26

TARIFFS, ADMISSION OF JAPAN

$2.5 BILLION IN TARIFF REDUCTION

5. DILLON

SEPT. 1960

11 MONTHS

26

TARIFFS

TARIFF CONCESSION

WORTH $4.9
BILLION OF WORLD TRADE.

ROUNDS CONT
NAME
6. KENNEDY

START
MAY 1964

DURATION
37 MONTHS

COUNTR IES 62

SUB. COVERED
TARIFFS & ANTIDUMPING

ACHIVEMENTS
TARIFF CONCESSION WORTH $40 BILLION OF WORLD TRADE

7. TOKYO

SEPT. 1973

74 MONTHS

102

TARIFF, NON TARIFF MEASURES, FRAMEWORK AGREEMENTS

TARIFF REDUCTION WORTH $190 BILLION ACHIEVED.

8. URUGUAY

SEPT. 1986

87 MONTHS

123

TARIFFS,NON TARIFFS,RULES, SERVICES,IP,DI SPUTE SETTLEMENT,TE XTILES,AGRI.

CREATION OF WTO, & EXTENDED THE RANGE OF TRADE NEGOTIATION,LEADING TO THE REDUCTION IN TARIFFS(ABOUT 40%).

Did GATT succeed?

Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s and 1960s around 8% a year on average

Trade growth consistently out-paced production growth The rush of new members during the Uruguay Round demonstrated recognition of multilateral trading system as the anchor for development and an instrument of economic and trade reform.

But.

 GATTs success in reducing tariffs to a low level, with a series of economic recessions 1970-80s drove governments to devise other forms of protection for sectors facing increased foreign competition

High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade

Both these changes undermined GATTs credibility and effectiveness.

 The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s

World trade had become far more complex and important than 40 years before The globalization of the world economy was underway Trade in services not covered by GATT rules

Ever increasing international investments

 Factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted.

That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.

Thank You