GAAT (GENERAL AGREEMENT ON TARRIFS AND TRADE)

GAAT:
GAAT stands for The General Agreement on Tariffs and Trade. GATT was created in 1947, and was originally
intended to become a part of the International Trade Organization (ITO); however, the ITO failed to be created,
so the GATT was left as an independent organization in December 31, 1994, when it was finally replaced by the
World Trade Organization (WTO) on January 1, 1995.

PURPOSE OF GAAT:
The purpose of GAAT was to lower trade barriers among the signatories, it was also expected that GAAT would
increase incomes and standard of living, develop national resources and expand trade. Another purpose of
GAAT was to make sure that every member enjoyed the same trade terms this was called most favored nation.

OBJECTIVES OF GAAT:
Main Objectives of GAAT are as follow:
1. To raise the standard of living of the people,
2. To ensure full employment and a large and steadily growing volume of real income and effective demand.
3. To tap the use of the resources of the world fully.
4. To expand overall production capacity and international trade.

Principles of GATT:
For the realization of the above mentioned objectives, GATT adopted the following principles.
1. Non Discrimination: Trade should be conducted on the basis of nondiscrimination. No member
country shall discriminate between members of GAAT in the conduct of international trade.
2. Protection through tariffs: GATT rules prohibit quantitative restrictions. Domestic
industries should be protected only through customs tariffs. Restrictions on trade should be
limited to the less rigid tariffs.
3. A stable basis of trade: GATT seeks to provide a stable and predictable basis for trade. It binds
the tariff levels negotiated among the contracting countries. Binding of tariffs prevents the unilateral
increase in tariffs, but still there is a provision for renegotiation of bound tariffs. A return to higher
tariffs is discouraged by the requirement that any increase is to be compensated for.
4. Consultation; the member countries should consult one another on trade matters and problems.
The members who feel aggrieved that their rights under GATT are withheld can call for a fair
settlement. By providing a forum for continuing consultation, GATT has provided to resolve
disagreements through consultation.