What was the 'General Agreement On Tariffs And Trade - GATT'
The General Agreement on Tariffs and Trade (GATT) was formed soon after World War II ended. The GATT was a trade treaty implemented to boost economic recovery. The primary purpose of GATT was to increase international trade through by eliminating or reducing various tariffs, quotas and subsidies while maintaining meaningful regulations.
BREAKING DOWN 'General Agreement On Tariffs And Trade - GATT'GATT became law on Jan. 1, 1948, once it was signed by 23 countries. GATT was refined over decades and eventually led to the 123 countries creating the World Trade Organization (WTO) on Jan. 1, 1995.
General Agreement on Tariffs and Trade Rounds
The GATT held eight rounds in total from April 1947 to September 1986, each with its own significant achievements and outcomes. The first round occurred in Geneva, Switzerland, and it included 23 countries. The main subject covered during this round was tariffs. This original round led to the formation of GATT and established tens of thousands of tax concessions affecting over $10 billion in trade. In April 1949, the second round of GATT occurred, in Annecy, France. Tariffs again were the main subject, and 13 countries were involved. During this round, 5,000 more tax concessions were exchanged between countries.
In April 1949, in Torquay, England, 38 countries were involved in the third round of GATT. Nearly 9,000 tariff concessions were agreed upon, reducing many tax levels by up to 25%. The fourth round of GATT convened in Geneva for a second time in January 1956. Japan was involved for the first time, along with 25 other countries. The main result of this round was a $2.5 billion reduction in tariffs across the globe. In September 1960, in Geneva, 26 countries participated in the fifth round of GATT, resulting in the elimination of an additional $4.9 billion in global tariffs.
Four years later, in 1964, the sixth round of GATT took place in Geneva, and it involved 62 countries. Approximately $40 billion of tariff concessions were the result of this round, as well as important discussions regarding the curbing of predatory pricing policies known as dumping. In the seventh round of GATT, in Tokyo in 1972, 102 countries achieved $300 billion in global tariff reductions.
The eighth round of GATT was held in 1986, in Uruguay. Many more topics beyond tariffs were included in the main agenda, including intellectual property, agriculture and dispute settlement. This meeting during this round of GATT led to the creation of the WTO.