General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
What is the General Agreement on Tariffs and Trade?
The General Agreement on Tariffs and Trade (GATT) is an international treaty created after World War II to boost economic recovery and growth through trade liberalization. Participating countries committed to reducing barriers to trade, such as tariffs and quotas.
Origins of General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was established in 1947 in Geneva with the objective of fostering fair trade and economic cooperation. Initially, 23 countries – dubbed 'contracting parties' – signed the agreement, which then steadily expanded to include over 100 nations.
Role and Functions of General Agreement on Tariffs and Trade
The key function of the General Agreement on Tariffs and Trade is to promote international trade by reducing or eliminating trade barriers like tariffs, quotas, and subsidies. This is achieved through rounds of negotiations between the member countries. GATT also aims to improve economic growth and development on a global scale by encouraging competition and efficiency in the marketplace.
Impact of General Agreement on Tariffs and Trade in Trading
In the context of trading, the General Agreement on Tariffs and Trade has played a significant role in shaping how trade is conducted internationally. By reducing barriers to trade, GATT has allowed for increased globalization and interdependence among economies. It also has implications for traders, as the reduction of tariffs can influence the prices and accessibility of goods and services internationally.
General Agreement on Tariffs and Trade in the Modern World
While the General Agreement on Tariffs and Trade no longer exists in its original form, its legacy endures in the form of the World Trade Organization (WTO) that was established in 1995. The WTO took over the management and expansion of the liberalized trading system originated by GATT, and continues to hold rounds of negotiations to further reduce global trade barriers.
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