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GATT Full Form

Ananya Gupta August 25, 2023 11:10 8832 0

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GATT full form stands for General Agreement on Tariffs and Trade. Learn about its full form, functions, transition to the WTO, benefits, limitations, and key conferences in this comprehensive guide.

GATT Full Form

GATT Full Form

GATT stands for “General Agreement on Tariffs and Trade.” It was an international treaty established in 1947 to promote international trade by reducing or eliminating trade barriers such as tariffs and quotas. GATT provided a framework for negotiations among member countries to reach agreements on trade-related issues and to facilitate the exchange of goods and services across borders. In 1995, GATT was replaced by the World Trade Organization (WTO), which incorporated and expanded upon the principles and provisions of GATT while also addressing additional aspects of international trade, including services and intellectual property.

GATT Full Form
Full Form General Agreement on Tariffs and Trade
Signed 30 October 1947
Location Geneva, Switzerland
Type Multilateral treaty

GATT Full Form in Hindi

GATT का पूरा नाम “सामान्य आकस्मिक शुल्क और व्यापार पर समझौता” है। यह 1947 में स्थापित एक अंतरराष्ट्रीय संधि था जिसका उद्देश्य अंतरराष्ट्रीय व्यापार को बढ़ावा देना और व्यापारिक बाधाओं को कम करना था। GATT ने सदस्य देशों के बीच व्यापार के विषयों पर समझौते और साझेदारी को सुविधाजनक बनाने के लिए एक ढांचा प्रदान किया। 1994 में, GATT को विश्व व्यापार संगठन (WTO) ने बदल दिया, जिसमें GATT के सिद्धांतों और प्रावधानों को समाहित किया गया और साथ ही अंतरराष्ट्रीय व्यापार के अतिरिक्त पहलुओं को भी समालेना जाता है, जैसे कि सेवाएँ और बौद्धिक संपदा।

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What is the GATT?

The General Agreement on Tariffs and Trade (GATT) was a multilateral international treaty that aimed to promote and regulate international trade. It was established in 1947 and operated until 1994, when it was replaced by the World Trade Organization (WTO). GATT’s primary objective was to reduce trade barriers and promote economic cooperation among its member countries.

Key features of the GATT included:

  1. Tariff Reduction: GATT aimed to lower tariffs (taxes on imports) and other trade barriers to facilitate the movement of goods and services between countries. Member countries engaged in rounds of negotiations to lower tariffs on various products.
  2. Most-Favored-Nation Principle (MFN): GATT members were required to treat all other members equally in terms of trade. If a country offered favorable trade terms (such as lower tariffs) to one country, it had to extend those terms to all other GATT members, ensuring non-discriminatory trade practices.
  3. National Treatment: GATT emphasized that imported goods should be treated equally to domestically produced goods once they entered a member country’s market. This prevented discrimination against imported products.
  4. Trade Dispute Settlement: GATT provided a mechanism for resolving trade disputes between member countries. If a country believed that another member was violating GATT rules, it could bring the case to the GATT dispute settlement process.
  5. Trade Rounds: GATT operated through a series of negotiations called “trade rounds.” These rounds involved negotiations on various trade-related issues, including tariff reductions, non-tariff barriers, and other trade rules. One of the most significant trade rounds was the Uruguay Round, which led to the creation of the World Trade Organization.

Propose of General Agreement on Tariffs and Trade

The idea of a General Agreement on Tariffs and Trade (GATT) was proposed during the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference, held in Bretton Woods, New Hampshire, USA, in July 1944. The conference aimed to create a framework for the post-World War II international economic order.

The concept of GATT was put forth by Harry Dexter White, an American economist and senior U.S. Treasury official, as part of the U.S. delegation led by John Maynard Keynes and Harry Dexter White. The idea was to establish an international organization that would address trade barriers and promote economic cooperation among nations to prevent the kind of protectionism and trade wars that had contributed to the Great Depression and exacerbated global tensions in the interwar period.

The proposal for GATT gained support from other participating countries at the conference, and it eventually led to the establishment of the General Agreement on Tariffs and Trade in 1947, when representatives from 23 countries signed the agreement in Geneva, Switzerland. GATT’s foundational principles and mechanisms laid the groundwork for the multilateral trading system, which aimed to reduce trade barriers and promote international trade in a cooperative manner.

Members of General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) had a varying number of member countries throughout its existence. It began with 23 original contracting parties when it was established in 1947. Over the years, the number of member countries grew as more nations joined the agreement. By the time GATT was succeeded by the World Trade Organization (WTO) in 1995, there were 128 member countries.

  1. Australia
  2. Belgium
  3. Brazil
  4. Burma (now Myanmar)
  5. Canada
  6. Ceylon (now Sri Lanka)
  7. Chile
  8. China
  9. Cuba
  10. Czechoslovakia
  11. France
  12. India
  13. Lebanon
  14. Luxembourg
  15. Netherlands
  16. New Zealand
  17. Norway
  18. Pakistan
  19. Southern Rhodesia (now Zimbabwe)
  20. Syria
  21. United Kingdom
  22. United States
  23. Uruguay
  24. Japan
  25. German
  26. Italy
  27. South Korea
  28. Mexico
  29. Russia
  30. China (rejoined after the formation of the People’s Republic of China)
  31. India
  32. Brazil
  33. Argentina
  34. Indonesia

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Functions of General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) served several important functions to facilitate international trade and promote economic cooperation among its member countries. Some of the key functions of GATT were:

  1. Tariff Reduction: GATT aimed to reduce tariffs on goods and services among member countries. Tariffs are taxes imposed on imports, and by reducing these tariffs, GATT aimed to lower the cost of imported goods, thereby promoting trade and economic growth.
  2. Non-Discrimination: GATT established the principle of “Most-Favored-Nation” (MFN) treatment, which meant that any advantage, favor, privilege, or immunity granted by one member country to another must be extended to all member countries. This principle promoted fairness and prevented discriminatory trade practices.
  3. National Treatment: GATT emphasized that imported products should be treated no less favorably than domestic products once they entered a member country’s market. This principle aimed to prevent discrimination against foreign products.
  4. Trade Rounds and Negotiations: GATT conducted multiple rounds of negotiations, known as “trade rounds,” during which member countries negotiated and agreed upon various trade-related matters, including tariff reductions, trade rules, and agreements on specific industries or sectors.
  5. Trade Dispute Settlement: GATT provided a mechanism for resolving trade disputes among member countries. If a country believed that another member was violating GATT rules, it could bring the case to the GATT dispute settlement process for resolution.
  6. Trade Rules and Principles: GATT established a set of rules and principles governing international trade, which provided a framework for fair and predictable trade relations among member countries. These rules covered areas such as subsidies, anti-dumping measures, and safeguards.
  7. Economic Development: GATT aimed to contribute to global economic development by fostering trade, reducing trade barriers, and creating a more stable trading environment. By facilitating international trade, GATT helped countries access markets and resources that could contribute to their economic growth.
  8. Stabilizing Global Economy: GATT’s efforts to reduce protectionist measures and promote trade stability helped prevent a repetition of the protectionist policies that had exacerbated the Great Depression in the 1930s.
  9. Negotiation Platform: GATT provided a forum for member countries to negotiate and discuss trade-related matters, enabling them to address their economic concerns and interests through diplomacy and negotiations.
  10. Transition to the World Trade Organization (WTO): GATT played a crucial role in the establishment of the World Trade Organization (WTO) in 1995. The final GATT agreement, known as the Uruguay Round, led to the creation of the WTO, which expanded the scope of trade negotiations to include services, intellectual property, and other modern trade issues.

Why was GATT replaced by the World Trade Organization (WTO)?

The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO) to address limitations in the GATT system and to establish a more comprehensive and effective framework for regulating international trade. There were several reasons for transitioning from GATT to the WTO:

  1. Expanded Scope: GATT primarily focused on trade in goods, and its rules did not adequately cover new areas of trade such as services, intellectual property, and investment. The global economy was evolving, and trade was becoming more complex. The WTO was designed to address these broader aspects of trade and bring them under a single institutional umbrella.
  2. Modernization: GATT had undergone multiple rounds of negotiations, resulting in fragmented agreements. The Uruguay Round of GATT negotiations, which concluded in 1994, aimed to update and expand the GATT framework. The resulting agreements covered not only goods but also services, intellectual property, and other trade-related issues. To implement these comprehensive agreements, the establishment of a new, modern organization was necessary.
  3. Dispute Settlement Mechanism: While GATT had a dispute settlement mechanism, it had limitations in terms of enforcement and effectiveness. The WTO introduced a stronger and more binding dispute settlement mechanism that ensured prompt and enforceable resolution of trade disputes among member countries.
  4. Institutional Structure: The WTO was designed to be a permanent institution with a formalized structure, including a Secretariat and a more robust decision-making process. GATT operated on a more informal basis and lacked a centralized institutional setup.
  5. Consolidation of Agreements: The Uruguay Round negotiations resulted in numerous agreements covering various aspects of trade. The WTO provided a platform to consolidate and manage these agreements in a coherent manner.
  6. Trade Policy Review Mechanism: The WTO introduced a Trade Policy Review Mechanism that required member countries to periodically report on their trade policies and practices. This increased transparency and provided a better understanding of each member’s trade policies.
  7. Economic and Political Changes: The geopolitical landscape had changed since the establishment of GATT. The end of the Cold War and the increasing globalization of the world economy necessitated a more robust and effective international trade organization to manage trade-related issues.
  8. Permanent Commitment: The transition to the WTO represented a commitment by member countries to a more permanent and comprehensive trade regime, reflecting their recognition of the importance of international trade in a rapidly changing world.

Benefits of General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) brought about several significant benefits for its member countries and the global economy. Some of the key benefits of GATT include:

  1. Trade Expansion: GATT aimed to reduce tariffs and trade barriers among member countries. By doing so, it facilitated the flow of goods and services across borders, leading to increased trade volumes and economic growth.
  2. Economic Growth: Lowering trade barriers through GATT contributed to economic growth by promoting efficient resource allocation, encouraging specialization, and fostering competition among countries.
  3. Consumer Benefits: Reduced tariffs resulted in lower prices for imported goods, benefiting consumers with a wider variety of products at more competitive prices.
  4. Business Opportunities: GATT provided businesses with access to larger markets and more opportunities for export. This expansion of markets helped businesses grow and diversify their customer base.
  5. Protection against Protectionism: GATT discouraged the adoption of protectionist measures such as high tariffs and trade restrictions that can lead to trade wars and economic downturns, as seen during the Great Depression.
  6. Stable International Relations: By providing a framework for negotiations and dispute resolution, GATT contributed to stable and cooperative international relations, fostering a sense of mutual understanding and reducing the potential for trade-related conflicts.
  7. Predictability: GATT established a set of rules and principles that member countries could rely on when engaging in trade. This predictability encouraged investment and long-term trade relationships.
  8. Least-Developed Countries: GATT recognized the need to assist less-developed countries and provided provisions allowing them to impose lower tariffs and enjoy trade preferences to stimulate their economic growth.
  9. MFN Treatment: The “Most-Favored-Nation” (MFN) principle ensured that no country would be discriminated against, promoting equitable trade relations and preventing trade discrimination.
  10. Trade Rounds: GATT’s rounds of negotiations, such as the Uruguay Round, provided opportunities for countries to come together and address trade-related issues collaboratively. This helped in the development of global trade rules and practices.
  11. Prevention of Beggar-Thy-Neighbor Policies: GATT discouraged countries from adopting policies that might harm their trading partners, encouraging a more cooperative approach to trade policies.
  12. Global Stability: GATT’s efforts contributed to global economic stability by preventing the escalation of trade conflicts that could disrupt the world economy.

Limitations of General Agreement on Tariffs and Trade

While the General Agreement on Tariffs and Trade (GATT) brought about numerous benefits, it also had its limitations and challenges. Some of the key limitations of GATT include:

  1. Limited Coverage: GATT primarily focused on trade in goods, neglecting emerging areas such as services, intellectual property, and investment. This limited scope did not adequately address the growing complexity of the global economy.
  2. Enforcement Challenges: GATT lacked a strong enforcement mechanism for its provisions and rulings. Member countries sometimes did not fully comply with their obligations, leading to disputes and difficulties in enforcing agreements.
  3. Selective Implementation: GATT allowed countries to negotiate exceptions and special treatment for certain industries, products, or circumstances. This could lead to unequal treatment among member countries and undermine the principle of non-discrimination.
  4. Inequitable Impact: While GATT aimed to promote economic growth, its benefits were not equally distributed among all member countries. Less-developed nations often faced challenges in fully capitalizing on the opportunities GATT offered.
  5. Dispute Settlement Delays: GATT’s dispute resolution mechanism could be slow and lacked the binding nature of enforcement. This sometimes resulted in unresolved trade disputes or delayed resolutions.
  6. Preference Erosion: Preferences granted to certain countries under GATT could lead to trade diversion, where countries shifted their trade patterns to take advantage of lower tariffs, potentially disadvantaging other trading partners.
  7. Non-Tariff Barriers: GATT focused primarily on reducing tariffs, but non-tariff barriers such as quotas, licensing requirements, and technical standards also had a significant impact on trade. These barriers were not adequately addressed under GATT.
  8. Political Pressures: Negotiations within GATT were influenced by political considerations and national interests, which could sometimes lead to compromises that did not fully reflect economic efficiency.
  9. Limited Participation: GATT initially had a limited number of member countries, which meant that not all nations benefited from its provisions. Some countries remained outside the agreement and were excluded from its advantages.
  10. Lack of Updating: GATT was originally created in 1947, and its structure and provisions did not always adapt well to the changing dynamics of the global economy and international trade practices.
  11. Rounds of Negotiations: GATT operated through rounds of negotiations, which could take years to conclude. This process sometimes led to delays in addressing emerging trade issues.
  12. Sustainability Challenges: GATT did not adequately address environmental and sustainability concerns related to trade, as its primary focus was on economic aspects.

Conferences organized by the General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) convened several rounds of negotiations, often referred to as trade rounds or conferences, during its existence. These conferences aimed to negotiate and reach agreements on various trade-related issues among member countries. Some of the notable conferences held by GATT include:

  1. Geneva Conference (1947): The first GATT conference took place in Geneva, Switzerland, where the initial agreement was negotiated among 23 contracting parties. This conference marked the establishment of GATT and the commitment to reduce trade barriers.
  2. Annecy Conference (1949): The second GATT conference, held in Annecy, France, focused on further tariff reductions and trade liberalization. This conference sought to build on the progress made during the first round of negotiations.
  3. Torquay Conference (1950-1951): The Torquay Round aimed to continue the reduction of trade barriers and resulted in substantial tariff reductions on a wide range of products. It helped stimulate global trade after the disruptions of World War II.
  4. Geneva II Conference (1956): This conference focused on addressing remaining trade barriers and worked to extend the provisions of GATT to more countries, with the participation of newly independent nations.
  5. Dillon Round (1960-1961): The Dillon Round aimed to liberalize trade further, but progress was limited due to political tensions during the Cold War. The negotiations focused on reducing tariffs on manufactured goods.
  6. Kennedy Round (1964-1967): Named after U.S. President John F. Kennedy, this round aimed to address both tariff and non-tariff barriers. It led to substantial tariff reductions and addressed issues like anti-dumping measures and subsidies.
  7. Tokyo Round (1973-1979): The Tokyo Round of negotiations aimed to address non-tariff barriers, including technical barriers to trade and subsidies. The round also sought to include developing countries more actively in the negotiations.
  8. Uruguay Round (1986-1994): The Uruguay Round was one of the most significant GATT conferences. It lasted for several years and concluded with the establishment of the World Trade Organization (WTO) in 1995. The round covered a wide range of issues, including services, intellectual property, agriculture, textiles, and more.

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Is GATT still in Effect?

No, the General Agreement on Tariffs and Trade (GATT) is no longer in effect as a standalone international agreement. GATT operated from its establishment in 1947 until it was succeeded by the World Trade Organization (WTO) in 1995.

The GATT framework was incorporated into the WTO, which was established to provide a more comprehensive and modernized approach to regulating international trade. The agreements and principles that were part of GATT were integrated into the WTO’s structure, and the WTO continued the work of GATT in promoting open and fair global trade.

While GATT itself is not operational anymore, its legacy lives on through the WTO, which builds upon the foundation laid by GATT and extends its principles to cover not only trade in goods but also services, intellectual property, dispute resolution, and other aspects of modern international trade.

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GATT FAQs

GATT stands for "General Agreement on Tariffs and Trade."

The main purpose of GATT was to promote international trade by reducing or eliminating trade barriers, such as tariffs and quotas, among its member countries.

GATT operated through rounds of negotiations among member countries to reach agreements on trade-related issues. These negotiations aimed to reduce tariffs and promote fair trade practices.

GATT was replaced by the WTO to address limitations in GATT's scope, enforcement mechanisms, and coverage of emerging trade issues like services and intellectual property. The WTO aimed to provide a more comprehensive and modern framework for regulating international trade.

GATT was the predecessor of the WTO. The WTO was established to build upon the principles and agreements of GATT, while also addressing new trade issues and providing a more structured and comprehensive international trade organization.

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