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GATT PPT

The General Agreement on Tariffs and Trade (GATT) was established in 1948 to promote free trade by reducing tariffs and resolving trade disputes among member countries. Over its existence, GATT facilitated significant reductions in trade barriers and adapted to changing global trade dynamics, ultimately leading to the creation of the World Trade Organization (WTO) in 1994. Despite its successes, GATT faced challenges in the 1980s due to economic recessions and evolving trade complexities, prompting the need for a more robust multilateral trading system.

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Hassan Gujjar
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212 views22 pages

GATT PPT

The General Agreement on Tariffs and Trade (GATT) was established in 1948 to promote free trade by reducing tariffs and resolving trade disputes among member countries. Over its existence, GATT facilitated significant reductions in trade barriers and adapted to changing global trade dynamics, ultimately leading to the creation of the World Trade Organization (WTO) in 1994. Despite its successes, GATT faced challenges in the 1980s due to economic recessions and evolving trade complexities, prompting the need for a more robust multilateral trading system.

Uploaded by

Hassan Gujjar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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GATT

GENERAL AGREEMENT ON TRADE


AND TARIFF
Tariff

“Tariff”or “duty” is a tax imposed by the government on an imported


good as it enters a country. Tariff does 2 things:

1. It adds on the cost of the imported item and hence to the price of
that imported item. It thus possibly reduces the competitiveness
of that item. Thus tariffs may act as a measure protecting the
local industry.

2. It gives revenue to the government


GATT
 Gatt the predecessor of the WTO
 was born in 1948 as a result of the international desire to
liberalize trade.
 It was set up on October 30, 1947, in Geneva with 23 countries
as its founder members.
 It started working on Jan 1, 1948.
 Agreement 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.
It was originally set up as a temporary arrangement
to bring about trade liberalization.

It later became an important and permanent set-up to


attend to all trade issues among the member
countries.

GATT played a prominent role in the settlement of


trade disputes between 2 countries
• Free trade has been the motto of GATT.

• During the next nearly half a century 1948-1994, many nations


successively joined the agreements. There were 8 rounds of GATT
trade negotiations in this period. Bringing forth significant reductions in
tariff and non-tariff barriers to trade.

• Gatt was created to be part of the International Trade Organization


(ITO), however, ITO failed to be created, ITO failed in 1950 so GATT was
left as an independent organization. In 1994 GATT was taken over by
the WTO
 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
Objectives
 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
Safeguards
 The agreement also provides proper
safeguards for the domestic industry and
trade.
 Article XIX of the General Agreement
permits a member country to impose
restrictions on imports or suspend tariff
concessions on products if they are
imported in excessive quantities and are
causing or threatening to cause serious
injury to competing domestic producers.
TRADE NEGOTIATIONS
UNDER GATT
 The GATT has organized seven trade
negotiations on so far. They are: 1947 (Geneva),
1949 (Anney, France), 1951 (Torquay, England),
1956 (Geneva), 1960-61 (Geneva, Dillon Round),
1964-67 (Geneva, Kennedy Round) and 1973-79
(Geneva, Tokyo Round).
 As a result of these negotiations, the tariff rates
on thousands of items entered into world trade
were reduced. The developed countries achieved
a 50% reduction in many industrial products.
TRADE NEGOTIATIONS AMONG
DEVELOPING COUNTRIES
 In an effort to increase trade among developing nations, the
eighteen of GATT members joined in an agreement in 1973,
providing for an exchange of mutually advantageous tariff and
trade concessions.
 These eighteen members are (countries) Bangladesh, Brazil,
Chile, Egypt, India, Israel, S.Korea, Mexico, Pakistan,
Paraguay, Peru, Philippines, Romania, Spain, Tunisia, Turkey,
Uruguay and Yugoslavia. The agreement is known as Protocol
relating to trade negotiations among developing countries.
 All developing countries whether or not they are members of
GATT are allowed to join it. The participants negotiated for
concessions on about 500 tariffs heading including
agricultural,manufactured foods and raw material.
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 Place/name Subjects
covered

1947 Geneva Tariffs

1949 Annecy Tariffs

1951 Torquay Tariffs


Second Phase
Focused on reducing tariffs

Year Place/name Subjects covered

1960-1961 Geneva Tariffs


Dillon Round
1964-1967 Geneva Tariffs and anti-
Kennedy dumping measures
Round

1973-1979 Geneva Tariffs, non-tariff


Tokyo Round measures,
“framework”
agreements
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 Place/name Subjects covered

1986-1994 Geneva Tariffs, non-tariff


Uruguay measures, rules,
Round services,
intellectual
property, dispute
settlement, textiles,
agriculture, creation
of WTO, etc
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 the multilateral trading system as the
anchor for development and an instrument
of economic and trade reform.
But…….
GATT’s success in reducing tariffs to a low level,
with a series of economic recessions 1970-80’s
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
subsidy race to maintain their holds on agricultural
trade

Both these changes undermined GATT’s credibility


and effectiveness.
Factors convinced GATT members that a
new effort to reinforce and extend the
multilateral system should be attempted.

That effort resulted in the creation of


the WTO.
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
THANK YOU

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