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General Agreement on Tariffsand Trade

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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 tradedgoods

Providing a common mechanism forresolving trade disputes.

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GATT ???

Was the outcome of the failure of negotiatinggovernments to create the ITO

The Bretton Woods Conference introduced the idea foran organization to regulate trade as part of a larger planfor economic recovery after World War II

As governments negotiated the ITO, 15 negotiatingstates began parallel negotiations for the GATT as a way

to attain early tariff reductions

Once the ITO failed in 1950, only the GATT agreementwas left.

A Treaty, not an Organization

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Objective

The GATT's main objective was the Reduction ofBarriers to International Trade

This was achieved through the Reduction of

Tariff barriers

Quantitative Restrictions

Subsidies on trade through a series of agreements

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History

3 Phases

First Phase , from 1947 until the Torquay Round

A second phase, encompassing three rounds, from1959 to 1979

The Third phase, consisting only of the UruguayRound from 1986 to 1994

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First Phase

Commodities which would be covered by theagreement and freezing existing tariff levels

Year Place/name Subjects covered

1947 Geneva Tariffs

1949 Annecy Tariffs

1951 Torquay Tariffs

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Focused on reducing tariffs

Second Phase

Year Place/name Subjects covered

1960-1961 GenevaDillon Round

Tariffs

1964-1967 GenevaKennedyRound

Tariffs and anti-dumpingmeasures

1973-1979 GenevaTokyo Round

Tariffs, non-tariffmeasures, frameworkagreements

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Third Phase

Year Place/name Subjects covered

1986-1994 GenevaUruguay Round

Tariffs, non-tariffmeasures, rules,

services, intellectualproperty, disputesettlement, textiles,agriculture, creation ofWTO, etc

Extended the agreement fully to new areas such asintellectual property, services, capital, and agriculture.Out of this round the WTO was born.

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ROUNDS

NAME START DURAT

ION

COUNTR

IES

SUB.

COVERED

ACHIVEMENTS

1.GENEVA APRIL

1947

7

MONTHS

23 TARIFFS SIGNING OF GATT,

45,000 TARIFFCONCESSIONS

AFFECTING $10

BILLION OF TRADE.

2. ANNECY APRIL

1949

5

MONTHS

13 TARIFFS COUNTRIES

EXCHANGED SOME

5000 TARIFF

CONCESSIONS.

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ROUNDS CONT

NAME START DURATI

ON

COUNT

RIES

SUB.

COVERED

ACHEVEMENTS

3.

TORQUAY

SEPT. 1950 8 MONTHS 38 TARIFFS COUNTRIES

EXCHANGED SOME

8700 TARIFF

CONCESSIONS,

CUTTING THE

TARIFFS BY 25%

4. GENEVA

II

JAN. 1956 5 MONTHS 26 TARIFFS,

ADMISSIONOF JAPAN

$2.5 BILLION IN

TARIFF REDUCTION

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

WORTH $4.9

BILLION OF WORLD

TRADE.

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ROUNDS CONT

NAME START DURATION COUNTR

IES

SUB.

COVERED

ACHIVEMENTS

6.

KENNEDY

MAY 1964 37 MONTHS 62 TARIFFS &

ANTIDUMPING

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,DI

SPUTE

SETTLEMENT,T

EXTILES,AGRI.

CREATION OF WTO, &

EXTENDED THE RANGE OF

TRADE

NEGOTIATION,LEADING TO

THE REDUCTION IN

TARIFFS(ABOUT 40%).

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Did GATT succeed?

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Continual reductions in tariffs helped spur

very high rates of world trade growth duringthe 1950s and 1960s around 8% a year onaverage

Trade growth consistently out-pacedproduction growth

The rush of new members during theUruguay Round demonstrated recognition of

multilateral trading system as the anchor fordevelopment and an instrument of economicand trade reform.

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But.

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GATTs success in reducing tariffs to a low level, with aseries of economic recessions 1970-80s drovegovernments to devise other forms of protection forsectors facing increased foreign competition

High rates of unemployment and constant factory

closures led governments in Western Europe and NorthAmerica to seek bilateral market-sharing arrangementswith competitors and to embark on a subsidies race tomaintain their holds on agricultural trade

Both these changes undermined GATTs credibility andeffectiveness.

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The problem was not just a deteriorating trade policy

environment.

By the early 1980s the General Agreement was clearlyno longer as relevant to the realities of world trade as ithad been in the 1940s

World trade had become far more complex andimportant than 40 years before

The globalization of the world economy was underway

Trade in services not covered by GATT rules

Ever increasing international investments

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Factors convinced GATT members that a new effort toreinforce and extend the multilateral system should beattempted.

That effort resulted in the Uruguay Round, the MarrakeshDeclaration, and the creation of the WTO.

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Thank You