General Agreement on Tariffs and Trade (GATT)

What is the General Agreement on Tariffs and Trade?

Back on October 30, 1947, 23 countries signed the General Agreement on Tariffs and Trade (GATT), which is a legal agreement said to decrease barriers and restrictions on international trade by eradicating or decreasing subsidies, tariffs, and quotas while keeping substantial regulations.

The intention behind this agreement was to enhance Economic Recovery post-WWII via liberalizing and reconstructing the global trade. It was on January 1, 1948, when this agreement went into effect. Since the beginning, GATT has been refined, and eventually, it led to the development of the World Trade Organization (WTO) on January 1, 1995.

By the time WTO developed, 125 countries were signatories to GAAT, covering almost 90% of the global trade. The responsibility of GATT is given to the Council for Trade in Goods (Goods Council) that comprises a representative from all WTO member countries.

This council has 10 different committees that look after varying subjects like anti-dumping measures, subsidies, agriculture, and Market access.

History of GATT

Between April 1947 to September 1986, the GATT held eight meetings round. Each of these conferences had substantial achievements and results.

• The first meeting included 23 countries and was held in Geneva, Switzerland. The concentration was on tariffs. The members came up with tax concessions touching more than $10 billion of trade across the world.
• The second series started in April 1949, and the meetings were held in Annecy, France. Yet again, traffic remained the priority. 13 countries participated in this meeting and acquired extra 5000 tax concessions; thus, decreasing tariffs.
• The third meeting took place in Torquay, England in September 1950. In this meeting, 38 countries took part, and approximately 9000 tariff concessions passed; hence, decreasing the tax levels by 25%.
• In 1956, the fourth meeting was held where Japan participated for the first time apart from the 25 other nations. This meeting took place in Geneva, Switzerland and the committee again decreased the global tariff by $2.5 billion.

This series of meetings and decrease tariffs continued, adding new provisions in the GATT process. When the GATT was initially signed in 1947, the tariff was 22%. And, by the last round in 1993, it fell to almost 5%.

In 1964, the GATT started working toward the curb of predatory pricing policies. Over the years, the countries kept working on worldwide issues, such as protecting intellectual property, addressing disputes of agriculture, and more.