Posted in Operations and Supply Chain Terms, Total Reads: 287
GATT or General Agreement on Tariffs and Trade was a multilateral agreement signed in order to regulate international trade. It was the result of the failure on the part of negotiating governments to form the International Trade Organisation (ITO) and was negotiated during the United Nations Conference on Trade and Employment.
GATT was signed by 23 countries on October 30, 1947 in Geneva and it took effect from January 01, 1948. It lasted until the WTO (World Trade Organisation) was established on January 01, 1995. The original GATT text is still in effect with a few changes made at the Uruguay Round 1994 under the WTO framework. One of the most significant principles of GATT was to facilitate trade without discrimination and that each member nation must open its market equally to every other member nation.
As incorporated in unconditional MFN (Most Favoured Nation) clauses, this meant that once a country and its major trading partners had agreed to drop or decrease a tariff, that tariff cut was automatically transferred to every other member of GATT. Another important principle of GATT was of protection through tariffs rather than imposing import quotas or other forms of quantitative trade restrictions.
It also formulated an escape clause wherein contracting countries could alter the earlier signed agreements if they felt that their domestic producers suffered extensive losses due to the trade concessions granted to producers from other countries.
GATT held seven periodical world trade conferences as under:
i) Geneva – 1947
ii) Annecy, France – 1949
iii) Torquay, England – 1951
iv) Geneva – 1956 and again in 1960-62
v) Kennedy Round - 1964-67
vi) Tokyo Round – 1973-79
vii) Uruguay Round – 1986-94
These rounds were extremely successful in reducing the on world’s industrial goods from 40 percent of their market value in 1947 to less than 5 percent in 1993.
GATT went out of existence after the conclusion of the Uruguay Round on April 15, 1994 due to the creation of a new and stronger global organisation i.e., the WTO.