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 Place/name Geneva

Subjects covered

1947 1949

Tariffs Tariffs

Annecy

1951

Torquay

Tariffs

Second Phase
Focused on reducing tariffs
Subjects covered

Year 1960-1961

Place/name Geneva Dillon Round Geneva Kennedy Round

Tariffs

1964-1967

Tariffs and anti-dumping measures

1973-1979

Geneva Tokyo Round

Tariffs, non-tariff measures, framework agreements

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 START DURAT COUNTR SUB. ION IES COVERED ACHIVEMENTS
SIGNING OF GATT,

APRIL
1.GENEVA

7
MONTHS

45,000 TARIFF

1947

23

TARIFFS

CONCESSIONS AFFECTING $10 BILLION OF TRADE. COUNTRIES

2. ANNECY

APRIL 1949

5 MONTHS

13

TARIFFS

EXCHANGED SOME
5000 TARIFF CONCESSIONS.

ROUNDS CONT
DURATIO COUNT N RIES SUB. COVERED

NAME

START

ACHEVEMENTS
COUNTRIES EXCHANGED SOME

3. TORQUAY

SEPT. 1950

8 MONTHS

38

TARIFFS

8700 TARIFF CONCESSIONS, CUTTING THE TARIFFS BY 25%

4. GENEVA II

TARIFFS, JAN. 1956 5 MONTHS

26

ADMISSION OF JAPAN

$2.5 BILLION IN TARIFF REDUCTION

TARIFF CONCESSION 5. DILLON SEPT. 1960 11 MONTHS

26

TARIFFS

WORTH $4.9 BILLION OF WORLD

ROUNDS CONT
NAME START DURATION COUNTRI SUB. ES COVERED
TARIFFS & ANTIDUMPING

ACHIVEMENTS
TARIFF CONCESSION WORTH $40 BILLION OF WORLD TRADE

6. KENNEDY

MAY 1964

37 MONTHS

62

TARIFF, NON

7. TOKYO

SEPT.
1973

TARIFF

TARIFF REDUCTION WORTH $190 BILLION ACHIEVED.

74 MONTHS

102

MEASURES, FRAMEWORK AGREEMENTS

TARIFFS,NON TARIFFS,RULES,

CREATION OF WTO, & EXTENDED THE RANGE OF TRADE

8.

SEPT.

87 MONTHS

123

SERVICES,IP,DI

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