GATT/WTO & GLOBAL

LIBERALISATION

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• The global business environment is significantly
influenced by World Trade Organisation.
• Since no country can afford to be isolated, it also
influences the domestic business environment.
• Due to liberalisation, domestic firms have to
faace increased competition from foreign firms.
• On the other hand, it also provides them the
opportunity to venture into foreign markets and
seek foreign technologies and collabrations.
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 GATT and WTO
• General Agreement on Tariffs and Trade (GATT), is the
predecessor of WTO.
• In the Bretton Woods Conference of 1944, an
International Trade Organization was envisaged along
with the formation of IMF (International Monetary Fund)
and World Bank.
• The World Bank and IMF were set up in 1946 but the ITO
could not be formed because some of the member
countries objected that the enforcement provisions would
interfere with the autonomy of domestic policy making.

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• It was agreed that until the charter of ITO is
ratified, GATT would become the framework
for international trading system since it came
into being in 1948.
• All nations who were signatories to the GATT
were admitted to the International trading
system.
• GATT was transformed into WTO in 1995.

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• OBJECTIVES OF GATT:
• The important objectives of GATT are-
• 1. Raising Standard of Living
• 2. Ensuring full employment and a large and a
steadily growing volume of real income and
effective demand.
• 3. Developing full use of the resources of world.
• 4. Expansion of production and international trade.

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• GATT embodied certain conventions and general
principles governing international trade among the
member countries. The conventions are that:-
• 1. Any proposed changes in the tariff or other type of
commercial policy of a member country should not be
undertaken without consulting other parties to the
agreement.
• 2. The countries should negotiate within the
framework of GATT and work towards reduction of
tariffs and other barriers to international trade.
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• Principles of GATT
• 1. Non-Discrimination: No member country shall
discriminate between member countries in the
conduct of international trade. Every country shall be
treated as well as the most favored nation.
• 2. Prohibition of Quantitative restrictions: There shall
be no quantitative restrictions as far as possible
.Restrictions were allowed only in agricultural and
fishery products if the same restrictions and controls
were applicable in domestic trade.
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• 3.Consultation: Disagreements are sought to
be resolved through consultations .The
Uruguay round took seven years to conclude.

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