General Agreement on Tariffs and Trade
The
General Agreement on Tariffs and Trade (typically abbreviated
GATT) was originally created by the
Bretton Woods Conference as part of a larger plan for economic recovery after World War II. GATT included a reduction in
tariffs and other international trade barriers and is generally considered the precursor to the
World Trade Organization.
While the
United States has always participated in international trade, it did not take a leading role in global trade policy-making until the
Great Depression. Congress and The
Executive Branch came into conflict in deciding the mix of trade promotion and
protectionism. In order to stimulate
employment, Congress passed the
Reciprocal Trade Agreements Act of
1934, allowing the executive branch to negotiate
bilateral trade agreements for a fixed period of time.
During the
1930s the amount of bilateral negotiation under this act was fairly limited, and consequently did little to expand global trade. Near the end of the
Second World War U.S. policy makers began to experiment on a broader level. In the
1940s, working with the
British government, the United States developed two innovations to expand and govern trade among nations: the General Agreement on Tariffs and Trade (GATT) and the
International Trade Organization (ITO). GATT was a temporary
multilateral agreement designed to provide a framework of rules and a forum to negotiate trade barrier reductions among nations.
The first version of GATT, developed in
1947 during the
United Nations Conference on Trade and Employment in
Havana,
Cuba, is referred to as "GATT 1947". On
January 1,
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.
GATT 1947 in the US
The GATT, as an international agreement, is similar to a
treaty. Under
United States law it is classifed as a
congressional-executive agreement. Based on the
Reciprocal Trade Agreements Act it allowed the executive branch negotiating power over trade agreements with temporary authority from Congress. At the time it functioned as a provisional, but promising trade system. The agreement is based on the
"unconditional most favored nation principle." This means that the conditions applied to the most favored trading nation (i.e. the one with the least restrictions) apply to all trading nations.
In
1994 GATT was updated (
GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the
World Trade Organization (WTO). The 75 existing GATT members and the
European Communities became the founding members of the WTO on January 1,
1995. The other 52 GATT members rejoined the WTO in the following two years (the last being
Congo in
1997). Since the founding of the WTO, 21 new non-GATT members have joined and 28 are currently negotiating membership.
Of the original GATT members, only the
SFR Yugoslavia has not rejoined the WTO. Since
FR Yugoslavia, (renamed to
Serbia and Montenegro and with membership negotiations later split in two), is not recognized as a direct SFRY successor state; therefore, its application is considered a new (non-GATT) one. The contracting parties who founded the
WTO ended official agreement of the "GATT 1947" terms on
Decemeber 31, 1995.
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. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the
Tokyo Round)
plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.
[[1]]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.#
Geneva Round (
1948): 23 countries. GATT enters into force.#
Annecy Round (
1949): 13 countries.#
Torquay Round (
1951): 38 countries.# Geneva Fourth Round (
1956): 26 countries. Tariff reductions. Strategy set for future GATT policy toward developing countries, improving their positions as treaty participants.#
Dillon Round (
1962): 26 countries. Tariff reductions. Named after
C. Douglas Dillon, then U.S. Undersecretary of State.#
Kennedy Round (
1967): 62 countries. Tariff reductions. This was an across-the-board reduction rather than a product-by-product specification, for the first time. Anti-
dumping agreement (which, in the United States, was rejected by
Congress).#
Tokyo Round (
1979): 102 countries. Reduced non-tariff trade barriers. Also reduced tariffs on manufactured goods. Improvement and extension of GATT system.#
Uruguay Round (
1986): 125 countries. Created the
World Trade Organization to replace the GATT treaty. Reduced tariffs and
export subsidies, reduced other import limits and
quotas over the next 20 years, agreement to enforce
patents,
trademarks, and
copyrights (
TRIPS), extending international trade law to the service sector (
GATS) and open up foreign investment. It also made major changes in the dispute settlement mechanism of GATT.#
Doha Round: see
WTO.
*
Official Website of the GATT / WTO*
Parody/spoof Website of WTO *
Text of GATT with 1966 amendments*
All GATT Panel Reports*
GATT Digital Library 1947-1994 at Stanford University*
The WTO and Global Trade at PBS*
List of international trade topics
