General Agreement on Tariffs and Trade (GATT)

GATT International Trade Tariffs Trade Barriers WTO Economic Cooperation Multilateral Treaty
The General Agreement on Tariffs and Trade (GATT) was a multilateral treaty created to reduce tariffs and other trade barriers, aimed at promoting international trade and economic cooperation. It was later replaced by the World Trade Organization (WTO) in 1995.
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General Agreement on Tariffs and Trade (GATT)

Definition

The General Agreement on Tariffs and Trade (GATT) was established in 1947 as a legal agreement between many countries, aiming to promote international trade by reducing or eliminating trade barriers such as tariffs and quotas. Its primary purpose was to create a positive and sustainable global economic environment post World War II. GATT became the foundation upon which today’s trade rules under the World Trade Organization (WTO) were built.

Examples

  1. Tokyo Round (1973-1979): One of the significant rounds of GATT negotiations that resulted in the reduction of trade barriers and the establishment of more predictable trade rules.
  2. Uruguay Round (1986-1994): This negotiation round led to the creation of the WTO and introduced comprehensive agreements like TRIPS (Trade-Related Aspects of Intellectual Property Rights).

Frequently Asked Questions (FAQ)

What was the main objective of GATT?

  • The main objective of GATT was to reduce tariffs and other trade barriers to promote economic recovery and growth through international trade.

How many countries were part of GATT when it was first signed?

  • GATT commenced with 23 countries as original members.

When was GATT replaced by the WTO?

  • GATT was replaced by the World Trade Organization (WTO) on January 1, 1995.

What were the primary functions of GATT?

  • GATT functions included overseeing international trade agreements, providing a platform for negotiation, and resolving trade disputes.

Why was the replacement of GATT by WTO significant?

  • The WTO has a more comprehensive mandate, including trade in services and intellectual property, and a stronger institutional foundation for managing global trade relations.
  • World Trade Organization (WTO): The international organization established to oversee and facilitate international trade and ensure the smooth functioning of trade relations globally.
  • Tariffs: Taxes imposed on imported goods and services imposed by governments.
  • Trade Barriers: Restrictions on trade imposed by governments, including tariffs, quotas, and regulatory measures.
  • Uruguay Round: The eighth round of multilateral trade negotiations under GATT that led to the establishment of the WTO.
  • Tariff Reductions: The process of lowering taxes and trade duties imposed on imported goods.

Online References

Suggested Books for Further Studies

  • “The GATT/WTO: Law, Economics and Politics” by Donald A. Irwin
  • “The World Trading System: Law and Policy of International Economic Relations” by John H. Jackson
  • “The WTO and International Trade Law: Dispute Settlement” by Petros C. Mavroidis
  • “Global Trade Policy: Detailed Coverage of Global Regional and National Trade Policies” by Pamela J. Smith

Fundamentals of GATT: International Business Basics Quiz

### What was the primary objective of GATT? - [x] To reduce tariffs and other trade barriers. - [ ] To provide loans to developing countries. - [ ] To promote cultural exchanges. - [ ] To create a unified currency for member countries. > **Explanation:** The main objective of GATT was to reduce tariffs and trade barriers, thereby encouraging international trade and economic recovery post World War II. ### How many countries were original signatories of GATT? - [x] 23 - [ ] 12 - [ ] 34 - [ ] 56 > **Explanation:** When GATT was first signed in 1947, 23 countries were part of the agreement. ### When was GATT replaced by the WTO? - [x] January 1, 1995 - [ ] January 1, 1990 - [ ] January 1, 2000 - [ ] January 1, 1985 > **Explanation:** GATT was officially replaced by the World Trade Organization (WTO) on January 1, 1995. ### What significant round of negotiations led to the creation of the WTO? - [ ] Tokyo Round - [ ] Kennedy Round - [x] Uruguay Round - [ ] Doha Round > **Explanation:** The Uruguay Round, which took place from 1986 to 1994, led to the creation of the WTO. ### Which of the following was not a function of GATT? - [x] Providing development aid. - [ ] Overseeing international trade agreements. - [ ] Providing a platform for trade negotiations. - [ ] Resolving trade disputes. > **Explanation:** GATT did not provide development aid; its primary functions were related to overseeing trade agreements, negotiations, and dispute resolution. ### What are "tariffs"? - [x] Taxes imposed on imports. - [ ] Payments for international insurance. - [ ] Fees for shipping documentation. - [ ] Prices of goods in international markets. > **Explanation:** Tariffs are taxes imposed by governments on imported goods and services. ### How did the replacement of GATT by WTO enhance global trade management? - [x] By incorporating a broader range of trade aspects, including services and intellectual property. - [ ] By adopting a universal currency for trade. - [ ] By providing direct loans to member states. - [ ] By reducing the number of trade agreements. > **Explanation:** The WTO has a broader mandate than GATT, including trade in services and intellectual property, thereby enhancing the overall management of global trade. ### What type of trade barriers does GATT aim to reduce? - [ ] Only non-tariff barriers. - [x] Both tariffs and non-tariff barriers. - [ ] Only quotas. - [ ] Only regulatory measures. > **Explanation:** GATT aimed to reduce both tariffs and non-tariff trade barriers to facilitate international trade. ### Which round of GATT negotiations took place from 1973 to 1979? - [x] Tokyo Round - [ ] Kennedy Round - [ ] Uruguay Round - [ ] Doha Round > **Explanation:** The Tokyo Round, held from 1973 to 1979, focused on the reduction of trade barriers and the establishment of more predictable trade rules. ### What new elements did the WTO introduce not covered by GATT? - [x] Trade in services and intellectual property. - [ ] Trade in military goods. - [ ] Human rights regulations. - [ ] Environmental protection laws. > **Explanation:** The WTO introduced comprehensive agreements that included trade in services and intellectual property, elements not covered under GATT.

Thank you for learning about the General Agreement on Tariffs and Trade (GATT) through our informative content and engaging quiz. Stay curious and keep exploring the world of international business!

Wednesday, August 7, 2024
General Agreement on Tariffs and Trade (GATT)
General Accounting Office (GAO)
General Agreement on Tariffs and Trade (GATT) January 1, 1
General Agreement on Tariffs and Trade (GATT) January 1, 1
Most Favored Nation (MFN) January 1, 1
Trade War January 1, 1
World Trade Organization (WTO) January 1, 1
World Trade Organization (WTO) January 1, 1
Beggar-Thy-Neighbor Policy January 1, 1
Certificate of Origin January 1, 1
Comparative Advantage January 1, 1
Customs January 1, 1

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