UNIT-I: TRADE IN GOODS-I
1. General Agreement on Tariffs & Trade (GATT)
2. Agreement on Agriculture
3. Agreement on Sanitary & Phytosanitary Measures
4. Agreement on Technical Barriers to Trade
GENERAL AGREEMENT ON TARIFFS & TRADE (GATT)
The General Agreement on Tariffs and Trade (GATT), signed in 1947 by 23
countries, is a treaty minimizing barriers to international trade by eliminating
or reducing quotas, tariffs, and subsidies. It was intended to boost economic
recovery after World War II.
GATT was expanded and refined over the years, leading to the creation in 1995
of the World Trade Organization (WTO), which absorbed the organization
created to implement GATT. By then, 125 nations were signatories to its
agreements, which covered about 90% of global trade.12
The Council for Trade in Goods (known as the Goods Council) is now
responsible for GATT. It consists of representatives from all WTO member
countries. The chairperson of the Goods Council is Ambassador Clare Kelly of
New Zealand. The council has 10 committees that address subjects including
market access, agriculture, subsidies, and anti-dumping measures.
Understanding the General Agreement on Tariffs and Trade (GATT)
GATT was created to form rules to end or restrict the prewar protectionist
period's most costly and undesirable features, namely quantitative trade
barriers such as trade controls and quotas.
The agreement also provided a system for arbitrating commercial disputes
among nations. The framework enabled several multilateral negotiations to
,reduce tariff barriers. GATT was regarded as a significant success in the
postwar years.
Equal Treatment of Nations in Trade
One of GATT's key achievements was trade without discrimination. Every
signatory member was to be treated as equal to any other. This principle is
known as the most-favored-nation principle, and it was carried through into
the WTO.
A practical outcome of this was that once a country had negotiated a tariff cut
with some other countries (usually its most important trading partners), this
same cut would automatically apply to all GATT signatories. Escape clauses
did exist, whereby countries could negotiate exceptions if their domestic
producers would be particularly harmed by tariff cuts.
Most nations adopted the most-favored-nation principle in setting tariffs,
which largely replaced quotas. Tariffs (preferable to quotas but still a trade
barrier) were, in turn, cut steadily in successive rounds of negotiations.
The most-favored-nation principle concerning tariffs started with GATT and
continues to this day.
History of the GATT
GATT held eight rounds of meetings, the first beginning in April 1947 and the
last ending in December 1993. Each conference had significant achievements
and outcomes.
● The first meeting was in Geneva, Switzerland, and included 23
countries. The focus of this opening conference was on tariffs. The
members established tax concessions affecting more than US$10 billion
of trade around the globe.5
● The second series of meetings began in April 1949 and was 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.58
● In September 1950, the third series of GATT meetings occurred in
Torquay, England. This time, 38 countries were involved and almost
9,000 tariff concessions were passed, reducing tax levels by as much as
25%.8
● Japan became involved in GATT for the first time in 1956 at the fourth
meeting along with 25 other countries.9 The meeting was in Geneva,
and again the committee reduced worldwide tariffs, this time by US$2.5
billion.
This series of meetings and tariff reductions would continue, resulting in new
GATT provisions in the process. In 1964, GATT began to work toward curbing
predatory pricingpolicies (known as dumping). Then in the 1970s, an
arrangement regarding international trade in textiles, known as the Multifibre
Arrangement (MFA), came into force. The next big event was the Uruguay
Round, which lasted from 1986 to 1993, with the agreements signed in 1994,
and which created the WTO.
Overall Tariff Reduction
The average tariff rate fell from around 22% when the General Agreement was
first signed in Geneva in 1947 to around 5% by the end of the Uruguay Round.
As the years passed, the member countries continued to take on global issues,
including addressing agriculture disputes and working to protect intellectual
property.
What Is the Purpose of the General Agreement on Tariffs and Trade (GATT)?
GATT’s primary goal was to eliminate the protectionist policies that hindered
international trade in the years before and during World War II. By reducing
tariffs and quotas and encouraging nations to engage in mutually beneficial
, trade, GATT aimed to restore global economic stability, which was seen as a
crucial step in postwar economic recovery.
Is GATT a Free Trade Agreement?
Yes, GATT can be considered a form of free trade agreement. Its primary
objective was to push the world towards a system where goods and services
could be traded freely across borders without the restrictions of tariffs, quotas,
or discriminatory practices. By focusing on reducing trade barriers, GATT
sought to create a level playing field for all participating nations.
Why Was GATT Replaced by the World Trade Organization (WTO)?
GATT, though largely successful in reaching its goal, was said to lack a
coherent institutional structure. In short, it was a legal agreement acting as an
international organization. The World Trade Organization incorporates the
principles of GATT and is better positioned to carry them out because, among
other things, it is better versed in issues like intellectual property, has a faster
dispute settlement system, and wields more power.
The Bottom Line
The world would be a very different place without GATT. Its free trade ethos
put an end to a dark period of protectionism and economic hardship that led
to World War II, paving the way for decades of economic growth and increased
globalization.
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1. General Agreement on Tariffs & Trade (GATT)
2. Agreement on Agriculture
3. Agreement on Sanitary & Phytosanitary Measures
4. Agreement on Technical Barriers to Trade
GENERAL AGREEMENT ON TARIFFS & TRADE (GATT)
The General Agreement on Tariffs and Trade (GATT), signed in 1947 by 23
countries, is a treaty minimizing barriers to international trade by eliminating
or reducing quotas, tariffs, and subsidies. It was intended to boost economic
recovery after World War II.
GATT was expanded and refined over the years, leading to the creation in 1995
of the World Trade Organization (WTO), which absorbed the organization
created to implement GATT. By then, 125 nations were signatories to its
agreements, which covered about 90% of global trade.12
The Council for Trade in Goods (known as the Goods Council) is now
responsible for GATT. It consists of representatives from all WTO member
countries. The chairperson of the Goods Council is Ambassador Clare Kelly of
New Zealand. The council has 10 committees that address subjects including
market access, agriculture, subsidies, and anti-dumping measures.
Understanding the General Agreement on Tariffs and Trade (GATT)
GATT was created to form rules to end or restrict the prewar protectionist
period's most costly and undesirable features, namely quantitative trade
barriers such as trade controls and quotas.
The agreement also provided a system for arbitrating commercial disputes
among nations. The framework enabled several multilateral negotiations to
,reduce tariff barriers. GATT was regarded as a significant success in the
postwar years.
Equal Treatment of Nations in Trade
One of GATT's key achievements was trade without discrimination. Every
signatory member was to be treated as equal to any other. This principle is
known as the most-favored-nation principle, and it was carried through into
the WTO.
A practical outcome of this was that once a country had negotiated a tariff cut
with some other countries (usually its most important trading partners), this
same cut would automatically apply to all GATT signatories. Escape clauses
did exist, whereby countries could negotiate exceptions if their domestic
producers would be particularly harmed by tariff cuts.
Most nations adopted the most-favored-nation principle in setting tariffs,
which largely replaced quotas. Tariffs (preferable to quotas but still a trade
barrier) were, in turn, cut steadily in successive rounds of negotiations.
The most-favored-nation principle concerning tariffs started with GATT and
continues to this day.
History of the GATT
GATT held eight rounds of meetings, the first beginning in April 1947 and the
last ending in December 1993. Each conference had significant achievements
and outcomes.
● The first meeting was in Geneva, Switzerland, and included 23
countries. The focus of this opening conference was on tariffs. The
members established tax concessions affecting more than US$10 billion
of trade around the globe.5
● The second series of meetings began in April 1949 and was 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.58
● In September 1950, the third series of GATT meetings occurred in
Torquay, England. This time, 38 countries were involved and almost
9,000 tariff concessions were passed, reducing tax levels by as much as
25%.8
● Japan became involved in GATT for the first time in 1956 at the fourth
meeting along with 25 other countries.9 The meeting was in Geneva,
and again the committee reduced worldwide tariffs, this time by US$2.5
billion.
This series of meetings and tariff reductions would continue, resulting in new
GATT provisions in the process. In 1964, GATT began to work toward curbing
predatory pricingpolicies (known as dumping). Then in the 1970s, an
arrangement regarding international trade in textiles, known as the Multifibre
Arrangement (MFA), came into force. The next big event was the Uruguay
Round, which lasted from 1986 to 1993, with the agreements signed in 1994,
and which created the WTO.
Overall Tariff Reduction
The average tariff rate fell from around 22% when the General Agreement was
first signed in Geneva in 1947 to around 5% by the end of the Uruguay Round.
As the years passed, the member countries continued to take on global issues,
including addressing agriculture disputes and working to protect intellectual
property.
What Is the Purpose of the General Agreement on Tariffs and Trade (GATT)?
GATT’s primary goal was to eliminate the protectionist policies that hindered
international trade in the years before and during World War II. By reducing
tariffs and quotas and encouraging nations to engage in mutually beneficial
, trade, GATT aimed to restore global economic stability, which was seen as a
crucial step in postwar economic recovery.
Is GATT a Free Trade Agreement?
Yes, GATT can be considered a form of free trade agreement. Its primary
objective was to push the world towards a system where goods and services
could be traded freely across borders without the restrictions of tariffs, quotas,
or discriminatory practices. By focusing on reducing trade barriers, GATT
sought to create a level playing field for all participating nations.
Why Was GATT Replaced by the World Trade Organization (WTO)?
GATT, though largely successful in reaching its goal, was said to lack a
coherent institutional structure. In short, it was a legal agreement acting as an
international organization. The World Trade Organization incorporates the
principles of GATT and is better positioned to carry them out because, among
other things, it is better versed in issues like intellectual property, has a faster
dispute settlement system, and wields more power.
The Bottom Line
The world would be a very different place without GATT. Its free trade ethos
put an end to a dark period of protectionism and economic hardship that led
to World War II, paving the way for decades of economic growth and increased
globalization.
SPONSORED
Trade on the Go. Anywhere, Anytime
One of the world's largest crypto-asset exchanges is ready for you. Enjoy
competitive fees and dedicated customer support while trading securely. You'll
also have access to Binance tools that make it easier than ever to view your
trade history, manage auto-investments, view price charts, and make
