General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) was a legal agreement between many countries. Its main goal was to help international trade grow by lowering or removing things that make trade harder, like tariffs or quotas.

People first talked about GATT during a big meeting called the United Nations Conference on Trade and Employment. It started because countries could not agree to create another group called the International Trade Organization. GATT was signed by many nations in Geneva on 30 October 1947, and it began working on 1 January 1948. It stayed in use until 1 January 1995, when a new group, the World Trade Organization (WTO), was made after an agreement in Marrakesh on 15 April 1994.

GATT and the WTO helped lower tariffs a lot. In 1947, average tariffs for big countries were about 22%, but by 1999, they were down to 5%. Many experts say GATT and the WTO helped make this happen.

History

The General Agreement on Tariffs and Trade is a trade treaty between many countries. It was updated many times through talks called "rounds" from 1947 to 1995. Important people who helped create it included a lawyer named Ernst-Ulrich Petersmann, an economics teacher named Jan Tumlir, and a U.S. law teacher named John Jackson. In 1995, its role was taken over by the World Trade Organization.

During the 1940s, the United States wanted to create organizations to help rebuild trade after World War II. In 1947, at a meeting called the United Nations Conference on Trade and Employment, leaders talked about creating a new trade organization called the International Trade Organization. But when the United States pulled out, those plans fell apart.

Initial round

Later in 1947, 23 nations signed the GATT in Geneva, Switzerland. It started on January 1, 1948. At first, buying things from other governments was not included in the agreement.

Annecy Round: 1949

Main article: Annecy Round

The second round happened in 1949 in Annecy, France. Thirteen countries joined, and they talked mostly about cutting tariffs.

Torquay Round: 1951

Main article: Torquay Round

The third round was in Torquay, England, in 1951. Thirty-eight countries took part. They made changes to tariffs. The United States decided not to support the Havana Charter, which helped make GATT the main rule for world trade.

Geneva Round: 1955–1956

Main article: Geneva Round

The fourth round returned to Geneva in 1955 and lasted until May 1956. Twenty-six countries joined. They cut or ended tariffs.

Dillon Round: 1960–1962

Main article: Dillon Round

The fifth round happened in Geneva from 1960 to 1962. It was named after U.S. Treasury Secretary Douglas Dillon. Twenty-six countries took part. They cut tariffs and also talked about creating the European Economic Community (EEC).

Kennedy Round: 1964–1967

Main article: Kennedy Round

The sixth round happened between 1964 and 1967. It was named after U.S. President John F. Kennedy because he supported new trade rules. The main goals were to help developing countries grow, cut tariffs, and make it easier to sell farm products.

Tokyo Round: 1973–1979

Main article: Tokyo Round

This round, from 1973 to 1979, focused on cutting tariffs even more and making new rules to control other trade barriers. One hundred two countries joined.

Formation of Quadrilateral Group: 1981

The Quadrilateral Group was created in 1982 by the European Union, the United States, Japan, and Canada to have more influence on GATT.

Uruguay Round: 1986–1994

Main article: Uruguay Round

The Uruguay Round started in 1986 and was the biggest round so far. It wanted to add new areas like services, money movement, and farm products to trade rules. One hundred twenty-three countries took part. For the first time, developing countries played an active role.

Many countries wanted to change the rules for farming because it had been left out before. The new agreement aimed to make it easier to sell farm products and cut support that distorts prices. The old GATT rules stayed important even after the World Trade Organization started in 1995. The big agreements from the Uruguay Round were built using GATT’s ideas.

World Trade Organization

Main article: Uruguay Round

In 1993, the rules of the GATT were updated to create the World Trade Organization (WTO). On January 1, 1995, the GATT members and the European Communities became the first members of the WTO. Many more countries joined over the next few years, with Congo joining last in 1997. Since then, more countries have joined, and others are working to become members. As of 2018, there are 164 member countries in the WTO, including Liberia and Afghanistan.

Some original GATT members, like Syria, Lebanon, and the SFR Yugoslavia, have not joined the WTO. The WTO stopped using the old GATT rules on December 31, 1995. Montenegro joined in 2012, and Serbia is close to becoming a member. The WTO is an organization with its own offices and staff. It handles rules for trading goods, services, and ideas, building on the work started by GATT.

Effects on trade liberalisation

The General Agreement on Tariffs and Trade (GATT) helped countries lower taxes on goods coming into their countries. In 1947, these taxes were around 22% for countries in GATT. After talks and agreements, these taxes went down. By 1962 to 1967, they were about 15%, and after more talks, they dropped to under 5%.

GATT did more than just lower taxes. It made sure these lower taxes stayed for a long time, treated all trading partners fairly, made rules clearer, and gave a place to talk about trade problems. These steps helped make trade easier and more stable for everyone. Experts say GATT helped make the world's economy stronger and better for many people.

Article 24

After the United Kingdom's vote to withdraw from the European Union, some people thought that Article 24, paragraph 5B of the treaty could help keep trading conditions the same between the UK and the EU. They believed it could be used to create a temporary agreement while a final one was being negotiated, lasting up to ten years.

This idea was part of the "Malthouse compromise" to replace the withdrawal agreement. However, it was rejected by parliament. Critics, including Mark Carney and Liam Fox, said this plan wasn’t realistic because it needed an agreement between the parties, which wouldn’t exist in a "no-deal" situation. They also noted that services wouldn’t be included in such an arrangement.

Special and differential treatment

Special and differential treatment (S&D) is a set of rules in the General Agreement on Tariffs and Trade (GATT) that helps developing countries. These rules let developing countries follow simpler trade rules than richer countries. For example, in the Uruguay Round Agreement on Agriculture, developing countries get more time to change their export subsidies and tariffs than richer countries. The least developed countries do not have to make any changes at all.