GENERAL AGREEMENT ON TARIFFS AND TRADE BY CHIRAGH DEVAL @LEXCLIQ

GENERAL AGREEMENT ON TARIFFS AND TRADE

INTRODUCTION

The General Agreement on tariffs and trade is an agreement between many countries, with the main aim to reduce tariffs and quotas and promote International trade among the nations.

United Nations Conference was the place where General Agreement on tariffs and trade was first discussed that was on trade and employment. GATT was the outcome or we can say the failure of the ITO(International Trade Organization) because of some issues of the developed and underdeveloped countries ITO failed miserably and General Agreement on tariffs and trade came into existence. Signed by 23 countries and in Geneva on October 30th, 1947, and was applied on a provisional basis on January 1st, 1948. It was in existence till World Trade Organization came into effect until 1st January 1995. The WTO is the successor of the GATT as we all know and both were the successor for the reduction of tariffs.

GATT & WTO

The general agreement on tariff and trade was the multinational trade treaty among the states, consisted of nine rounds between 1947 & 1955.

GATT came after the second world war due to financial crises that prevail all over the globe. In 1993, the GATT was updated to include new obligations. There was a drastic change that made GATT into WTO existence. All the countries that were in GATT, was now the part of WTO with 76 existing GATT members and the European Communities became the founding members of the WTO on 1st January 1995. Later 51, GATT members rejoined the WTO in the following two years. The contracting parties who founded the WTO ended the official agreement of the “GATT 1947” terms on 31 December 1995.

GATT was the set of rules agreed upon by the nations on the other hand WTO was an intergovernmental organization, the scope includes both traded goods and trade within the service sector and intellectual property rights. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.\

EFFECTS ON TRADE LIBERALIZATION

About 22% of the average tariff participated in 1947. During the first negotiation round, a reduction was seen in the GATT core of the United States, United Kingdom, Canada, and Australia, to the non-GATT participants and relative to the other contracting parties.

In the end tariff reduction was the major concern in GATT and WTO, the early trade liberalization leads to the GATT’s contribution, which included the negotiated tariff reduction and established non-discrimination through MFN (Most Favored Nation) treatment and national treatment and all these led to rationalize trade policies and for the reduction of trade barriers.

CONCLUSION

General Agreement on trade and tariffs was the easy step to build the economy all over the world soon after the second world war took place because most of the nations failed miserably and the economic crisis has gone done instantly. So it was GATT only who can get a revert to the original crisis for the nations by telling the method of trade, rules of trade and to give a reduction in tariffs and quotas which will help the nations to gain a better economy for their upcoming generations. Soon after the GATT, the WTO took place which was the successor of the GATT only where more modified things were there in WTO.

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