GENERAL AGREEMENT

ON TARIFF AND TRADE

SUKANYA SARKAR
18-50-101
INTRODUCTION
• A multilateral agreement regulating international trade.
• It was in effect from June 30, 1948, until January 1, 1995,
when it was absorbed by the World Trade Organization
(WTO).
• GATT headquarter -Geneva, Switzerland.
• It was signed by 23 countries
• Focused on substantial reduction of tariffs
and other trade barriers.
HISTORY
• 1930 global depression international trade.
• Restriction in trade.
• After the WORLD WAR II , to boost economic ,by reducing or eliminating
trade tariffs, quotas and subsidies, the idea of ITO was proposed.
• INTERNATIONAL TRADE ORGANISATION----- A failed Attempt
• GATT was first discussed at Bretton Woods conference in 1944.
• Havana Charter ,A draft Agreement was prepared in 1948 for
establishment of ITO.
• But it was not ratified by the USA in 1950.
• the focus was shifted to GATT
GENERAL AGREEMENT ON
TARIFF AND TRADE
• Temporary agreement on multilateral tariff reductions.
• After several sessions, India and 22 other nations signed GATT on 30
October 1947 in Geneva, Switzerland. The agreement came into effect
on 1 January 1948
• The GATT provided global trade rules as well as a framework for trade
disputes from 1948 to 1994.
• In 1986, there were 117 members.
• GATT was not an organization.
GENERAL AGREEMENT ON
TARIFF AND TRADE
• GATT's most important principle was trade without discrimination,
• The General Agreement on Tariffs and Trade (GATT) was first signed in
1947, was designed -
• To provide an international forum.
• To encouraged free trade between members by
regulating and reducing tariffs on traded goods.
• Providing a common mechanism for resolving trade disputes
OBJECTIVES OF GATT
• According to the Preamble of GATT,main objective was
“Reduction of Barriers in International Trade
• the important objective are as follows as:-
1) Raising standards of living.
2) Ensuring full employment and large and steady growing volume of real
income and effective demand.
3) Developing full use of resources of the world.
4) Expansion of production and international trade.
5) Build an International trading system
FUNDAMENTAL PRINCIPLES OF
GATT
1. NON DISCRIMINATION- No member country shall
discriminate between members of GATT. GATT to apply the
principle of MFN(most favoured nation) status to all
import and export duties.
2. PROHIBITION OF QUANTITATIVE RESTRICTIONS- GATT
seek to prohibit quantitative restrictions as, far as possible and limit
restrictions on trade to the less rigid tariffs however certain
exceptions to this prohibition are granted to countries.
3. CONSULTATION- By providing a forum for continuing
consultation, GATT has provided to resolve disagreements through
consultation.
Contd….
• GATT achieved considerable liberalization, few exception are
as follow as:-
• Agricultural trade was an exception to the liberalizations..
• Another exception was textile: trade in textile was
restricted by MFA. under MFA import of textile items, to
number of developed countries was restricted by quota.
• Developing countries with balance of payment problem
have been generally exempted from liberalization.
PROTOCOL FOR PROVISION
APPLICATION
• Gatt provision may conflict with country law.
• To avoid such conflict protocol for provision application was
proposed.
• According to which the country which will sign the
agreement will free to implement only those provisions which
didn’t violates the existing law of land.
• Called grandfather’s right.
ARTICLES OF GATT
• Article I: General Most-Favoured-Nation Treatment
• This outlines the concept of Most-Favoured-Nation (MFN) treatment and states that trade concessions granted
to one Member are applied immediately and without conditions to all other Members.
• Article III: National Treatment on Internal Taxation & Regulation.
• Article VI: Anti-Dumping. Members may apply duties and other measures can be applied to goods
originating in other Members which are dumped and/or enjoy export subsidies subject to specific conditions.
• Article XI: General Elimination of Quantitative Restrictions Trade restrictions should be in the form of
duties, taxes and other charges whether effective through quotas, import and export licences and other
measures, ultimately requiring the tariffication of all quantitative restrictions. All new trade measures to be in
the form of tariffs.
• Article XVI: Subsidies Any subsidies affecting exports to and imports from Members should be notified in
writing. Members should recognise the deleterious impact of subsidies and avoid their general and specific
use.
• Article XVIII: Governmental Assistance to Economic Development
GATT TRADE ROUNDS
• multilateral trading system for trade is done through a series of negotiations (called 'rounds').
• FIRST PHASE:From 1947 until the Torquay Round
• 1.GENEVA ROUND
• Year : 1947
• Subject Covered : Tariffs.
• Tariff cut for 45,000products affecting $10billion of trade.
2.Annecy ROUND
• Year : 1949
• Subject Covered : Tariffs.
• Custom duty was cut for 5,000products
3.TORQUAY
• Year : 1950
• Subject Covered: Tariffs
• Around8,700tariff concessions.
GATT TRADE ROUNDS
Second Phase :A second phase, from 1956 to 1979.Focused on reducing
tariffs.
4.GENEVA II
• Year 1956
• Subject Covered: Tariff.
• $2.5 billion in tariff reductions
• Admission of Japan

5.DILLON
• Year:1960.
• $4.9 billion in tariff reduction
• Creation of the European Economic Community (EEC)
GATT TRADE ROUNDS
6.KENNEDY
• Year : 1964
• Reduction of $40 billion in tariffs
• Adoption of an anti-dumping code.
• 7.TOKYO
• Year : 1973
• Reduction of more than $300 billion in tariffs
GATT TRADE ROUNDS
• The Third phase, consisting only of the Uruguay Round from
1986 to 1994
• 8.URUGUAY
• Year : 1986
• Subject covered : Tariffs, non-tariff Measures, Intellectual property
rights,textile,agriculture,creation of WTO.
• Extension into the areas of agricultural, textile and clothing, and
service industries
• Protection of intellectual property rights.
• Improved system of settling trade disputes.
• Leads to formation of WTO.
IMPORTANT FEATURES OF
URUGUAY ROUND AGREEMENT
The Uruguay round agreement broaden the scope of MTN(multi
lateral trade nations)by including new areas.
1) General Agreement on Trade In Services (GATS).
2) Trade Related Aspects Of Intellectual Property and services.
(TRIPS)
3) Trade Related Investment Measures (TRIMS)
 DIFFERENCE BETWEEN GATT &
WTO
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) WORLD TRADE ORGANIZATION (WTO)

GATT is a set of rules and multilateral agreement. WTO is a permanent institution.

GATT is designed with an attempt to establish
International Trade Organization.
It was applied on a provisional basis.
Its rules are applicable to trade and merchandise goods.
Its dispute settlement system was not faster and
automatic.
It had contracting parties.
It has no provisions for creating an organization.
GATT is ad-hoc and provisional.
WTO is established to serve its own purpose.
Its activities are full and permanent.
Its rules are applicable to trade in merchandise services and
trade in related aspects of intellect.
Its dispute settlement was faster and automatic.
It has members.
It has a legal basis because member nations have verified
the WTO agreements.
WTO commitments are full and permanent..