The General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement

regulating international trade. According to its preamble, its purpose is the
“substantial reduction of tariffs and other trade barriers and the elimination of
preferences, on a reciprocal and mutually advantageous basis. ” GATT was
negotiated during the UN Conference on Trade and Employment and was the
outcome of the failure of negotiating governments to create the International
Trade Organization (ITO). GATT was signed in 1947 and lasted until 1993, when
it was replaced by the World Trade Organization (WTO) in 1995. The original
GATT text (GATT 1947) is still in effect under the WTO framework, subject to the
modifications of GATT 1994.

GATT held a total of eight rounds, during which countries exchanged tariff
concessions and reduced tariffs.

In 1993, the GATT was updated (GATT 1994) to include new obligations upon its
signatories. One of the most significant changes was the creation of the WTO. The
75 existing GATT members and the European Communities became the founding
members of the WTO on January 1, 1995. The other 52 GATT members rejoined
the WTO in the following two years, the last being Congo in 1997. Since the
founding of the WTO, 21 new non-GATT members have joined and 29 are
currently negotiating membership. There are a total of 157 member countries in
the WTO, with Russia and Vanuatu being new members as of 2012.
Of the original GATT members, Syria and SFR Yugoslavia (SFRY) have not
rejoined the WTO. Because FR Yugoslavia (later renamed Serbia and
Montenegro) is not recognized as a direct SFRY successor state, its application is
considered a new (non-GATT) one. The General Council of WTO, on 4 May 2010,
agreed to establish a working party to examine the request of Syria for WTO
membership. The contracting parties who founded the WTO ended official
agreement of the “GATT 1947” terms on 31 December 1995. Serbia and
Montenegro are in the decision stage of the negotiations and are expected to
become the newest members of the WTO in 2012 or in the near future.

The GATT was created to form rules to end or restrict the most costly and
undesirable features of the prewar protectionist period, namely quantitative trade
barriers such as trade controls and quotas. The agreement also provided a system
to arbitrate commercial disputes among nations, and the framework enabled a
number of multilateral negotiations for the reduction of tariff barriers. The GATT
was regarded as a significant success in the postwar years.

The GATT held eight rounds of meetings between April 1947 and December 1993.
Each of the conferences had significant achievements and outcomes.

The first meeting was in Geneva, Switzerland, and included 23 countries. The
focus in this opening conference was on tariffs. The members established tax
concessions touching over US$10 billion of trade around the globe.
The second series of meetings began in April 1949 and were held in Annecy,
France. Again, tariffs were the primary topic. Thirteen countries were at the
second meeting, and they accomplished an additional 5,000 tax concessions
reducing tariffs.
Starting in September 1950 the third series of GATT meetings occurred in Torque,
England. This time 38 countries were involved,10 and almost 9,000 tariff
concessions passed, reducing tax levels by as much as 25%.
Japan became involved in the GATT for the first time in 1956 at the fourth meeting
along with 25 other countries. The meeting was in Geneva, Switzerland, and again
the committee reduced worldwide tariffs, this time by US$2.5 billion.
This series of meetings and reduced tariffs would continue, adding new GATT
provisions in the process. The average tariff rate fell from around 22%, when the
GATT was first signed in Geneva in 1947, to around 5% by the end of the Uruguay
Round, concluded in 1993, which also negotiated the creation of the WTO.

In 1964 the GATT began to work toward curbing predatory pricing policies. These
policies are known as dumping. As the years have passed, the countries have
continued to attack global issues, including addressing agriculture disputes and
working to protect intellectual property.

Key Points
 The General Agreement on Tariffs and Trade (GATT) is a multilateral
agreement regulating international trade, the purpose of which is the
“substantial reduction of tariffs and other trade barriers and the elimination
of preferences, on a reciprocal and mutually advantageous basis”.
 The failure to create the International Trade Organization (ITO) resulted in
the GATT negotiation at the UN Conference on Trade and Employment.
 GATT was in place from 1947-1993, when it was replaced by the World
Trade Organization (WTO) in 1995.
  GATT text is still in effect under the WTO framework, subject to
modifications.
 During GATT’s eight rounds, countries exchanged tariff concessions and
reduced tariffs.

Key Terms
 multilateral: Involving more than one party (often used in politics to refer to
negotiations, talks, or proceedings involving several nations).
 tariff: A system of government-imposed duties levied on imported or
exported goods; a list of such duties, or the duties themselves.