GENERAL AGREEMENT

ON TARIFFS AND TRADE

 The General Agreement on Tariffs and Trade
(GATT) was first signed in 1947.

GATT 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

 GATT 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 Subjects

covered

1947 Geneva Tariffs

1949 Annecy Tariffs

1951 Torquay Tariffs

 Second Phase

Focused on reducing tariffs

Year Place/name Subjects covered

1960-1961 Geneva Tariffs

Dillon Round
1964-1967 Geneva Tariffs and anti-dumping
Kennedy Round measures

1973-1979 Geneva Tariffs, non-tariff

Tokyo Round 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 Tariffs, non-tariff

Uruguay Round measures, rules,
services, intellectual
property, dispute
settlement, textiles,
agriculture, creation of
WTO, etc
 ROUNDS

NAME START DURATION COUNTRIES SUB. COVERED ACHIVEMENTS

1.GENEVA APRIL 7 MONTHS 23 TARIFFS SIGNING OF GATT,

45,000 TARIFF
1947 CONCESSIONS
AFFECTING $10
BILLION OF TRADE.

2. ANNECY APRIL 5 13 TARIFFS COUNTRIES

EXCHANGED SOME
1949 MONTHS
5000 TARIFF
CONCESSIONS.
NAME START DURATION COUNT SUB. ACHEVEMENTS
RIES COVERED
3. SEPT. 1950 8 MONTHS 38 TARIFFS COUNTRIES
TORQUAY EXCHANGED SOME
8700 TARIFF
CONCESSIONS,
CUTTING THE
TARIFFS BY 25%

4. GENEVA JAN. 1956 5 MONTHS 26 TARIFFS, $2.5 BILLION IN

II ADMISSION TARIFF REDUCTION
OF JAPAN

5. DILLON SEPT. 1960 11 MONTHS 26 TARIFFS TARIFF CONCESSION

WORTH $4.9
BILLION OF WORLD
TRADE.
NAME START DURATION COUNTR SUB. ACHIVEMENTS
IES COVERED
6. MAY 1964 37 MONTHS 62 TARIFFS & TARIFF CONCESSION
KENNEDY ANTIDUMPING WORTH $40 BILLION OF
WORLD TRADE

7. TOKYO SEPT. 74 MONTHS 102 TARIFF, NON TARIFF REDUCTION

1973 TARIFF WORTH $190 BILLION
MEASURES, ACHIEVED.
FRAMEWORK

AGREEMENTS

8. SEPT. 87 MONTHS 123 TARIFFS,NON CREATION OF WTO, &

URUGUAY 1986 TARIFFS,RULES, EXTENDED THE RANGE OF

SERVICES,IP,DI TRADE
SPUTE NEGOTIATION,LEADING TO
SETTLEMENT,TE THE REDUCTION IN

XTILES,AGRI. TARIFFS(ABOUT 40%).

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.
Impact Of GATT
 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.
 Whereas GATT was a set of rules agreed upon
by nations, the WTO is an institutional body.
The WTO expanded its scope from traded
goods to trade within the service sector and
intellectual property rights
 The workings of the GATT agreement are the
responsibility of the Council for Trade in
Goods (Goods Council) which is made up of
representatives from all WTO member
countries.
 GATT has been replaced by WTO.

Even though the functions of GATT had been

taken over by the WTO, it works on the frame
work of GATT.

WTO is the working institutional body.

 GOODS COUNCIL

The General Agreement on Tariffs and Trade (GATT) covers international

trade in goods. The workings of the GATT agreement are the
responsibility of the Council for Trade in Goods (Goods Council) which is
made up of representatives from all WTO member countries. The
current chair is Ambassador CHOI KYONGLIM (Korea, Republic of).
The Goods Council has 10 committees dealing with specific subjects
(such as agriculture, market access, subsidies, anti-dumping measures
and so on). Again, these committees consist of all member countries.
Also reporting to the Goods Council are a working party on state trading
enterprises, and the Information Technology Agreement (ITA)
Committee.