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Presented By : Amol Phadale Roll No. 540 S.Y.M.M.S.

General Agreement on Tariffs and Trade (GATT)


Outcome of the failure of negotiating governments to

create the International Trade Organization (ITO) Negotiated during the UN Conference on Trade and Employment Formed in 1947 and transformed to World Trade Organization (WTO) in 1995

GATT
Part of economic recovery after World War II, Bretton

Woods Conference suggested an organization to regulate trade Parallel to the Governments negotiating the ITO, 15 negotiating states began negotiating for the GATT as a way to attain early tariff reductions The ITO failed in 1950 and then GATT agreement was introduced

GATT
GATT's main objective Reduction of barriers to international trade Achieved through reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of agreements It was a treaty, not an organization
A small secretariat occupied what is today the Centre

William Rappard in Geneva, Switzerland

Inception
Efforts to negotiate international trade agreements began in 1927 at

the League of Nations but were unsuccessful. Precursor organization to GATT, ITO, was first proposed in February 1945 by the United Nations Economic and Social Council (UNESCO). Owing to the United States failing to implement the ITO, GATT was the only organization left. On 1 January, 1948 the agreement was signed by 23 countries: Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, the Czechoslovak Republic, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, the United Kingdom, and the United States. According to GATT's own estimates, the negotiations created 123 agreements that covered 45,000 tariff items that related to approximately one-half of world trade or $10 billion in trade.

In Brief

General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade

(GATT) was first signed in 1947.


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

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

1. Tariff
GATT obligates each country to accord no discriminative, most favored nation (MFN) treatment to all other contracting parties with respect to tariffs. MFN treatment does not mean free trade or national treatment. Imports from contracting parties are subject to tariffs or quotas.

2. Quantitative Restrictions
GATT in general prohibits the use of quantitative restrictions on imports and exports

3. Developing Countries
Developed economies will give high priority to reduction/elimination of tariffs on products of LDCs. Refrain from introducing tariffs and NTBs to such imports. Refrain from imposing internal taxes to discourage consumption of primary products from LDCs Not expect reciprocal commitments from LDCs

Achievements
(i) Trade liberalization in industrial products (Kennedy Round) (ii) Adopted codes on NTBs (Tokyo Round) (iii) No world wars since 1948 (Increased trade promotes world peace)

History
Divided into 3 phases: First:

From 1947 until the Torquay Round Largely concerned which commodities would be covered by the agreement Freezing existing tariff levels

Second: From 1959 to 1979 Focused on reducing tariffs


Third: Consists only of the Uruguay Round from 1986 to 1994 It extended the agreement to new areas such as intellectual property, services, capital, and agriculture Final outcome was creation of WTO

History (Contd...)
GATT signatories occasionally negotiated new trade

agreements that all countries would enter into Each set of agreements was called a round In general, each agreement bound members to reduce certain tariffs. Usually this would include many special-case treatments of individual products, with exceptions or modifications for each country.

First Phase
Commodities which would be covered by the agreement

and freezing existing tariff levels


Year 1947 1949 Place/name Geneva Annecy Subjects covered Tariffs Tariffs

1951

Torquay

Tariffs

Second Phase
Focused on reducing tariffs
Year
1960-1961 1964-1967

Place/name
Geneva Dillon Round Geneva Kennedy Round Geneva Tokyo Round

Subjects covered
Tariffs Tariffs and anti-dumping measures Tariffs, non-tariff measures, framework agreements

1973-1979

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 1986-1994 Place/name Geneva Uruguay Round Subjects covered Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc

ROUNDS
NAME
1.GENEVA

START APRIL 1947

DURAT COUNTR SUB. ION IES COVERED


7 MONTHS

ACHIVEMENTS
SIGNING OF GATT, 45,000 TARIFF CONCESSIONS AFFECTING $10 BILLION OF TRADE.

23

TARIFFS

2. ANNECY APRIL 1949

5 MONTHS

13

TARIFFS

COUNTRIES EXCHANGED SOME 5000 TARIFF

CONCESSIONS.

ROUNDS CONT
NAME
3. TORQUAY

START DURATION COUNTR IES


SEPT. 1950 8 MONTHS

SUB. COVERED TARIFFS

ACHEVEMENTS
COUNTRIES EXCHANGED SOME 8700 TARIFF CONCESSIONS, CUTTING THE TARIFFS BY 25%

38

4. GENEVA II

JAN. 1956

5 MONTHS

26

TARIFFS, ADMISSION OF JAPAN

$2.5 BILLION IN TARIFF REDUCTION

5. DILLON

SEPT. 1960

11 MONTHS

26

TARIFFS

TARIFF CONCESSION WORTH $4.9 BILLION OF WORLD TRADE.

ROUNDS CONT
NAME
6. KENNEDY

START DURATIO N
MAY 1964 37 MONTHS

COUNT RIES 62

SUB. COVERED
TARIFFS & ANTIDUMPING

ACHIVEMENTS
TARIFF CONCESSION WORTH $40 BILLION OF WORLD TRADE

7. TOKYO

SEPT. 1973

74 MONTHS

102

TARIFF, NON TARIFF MEASURES, FRAMEWORK AGREEMENTS

TARIFF REDUCTION WORTH $190 BILLION ACHIEVED.

8. URUGUAY

SEPT. 1986

87 MONTHS

123

TARIFFS,NON TARIFFS,RULES, SERVICES,IP,DISPU TE SETTLEMENT,TEXTI LES,AGRI.

CREATION OF WTO, & EXTENDED THE RANGE OF TRADE NEGOTIATION,LEADING TO THE REDUCTION IN 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.

But.

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.