General Agreement On Tariffs And Trade - GATT

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What is the 'General Agreement On Tariffs And Trade - GATT'?

The General Agreement on Tariffs and Trade (GATT) was formed in 1948 after World War II. The GATT is an international trade treaty designed to boost the economic recovery of countries. The primary purpose of GATT was to increase international trade 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 January 1, 1948, and it was signed by 23 countries. GATT has been refined since its initial introduction and eventually led to the creation of the  World Trade Organization (WTO) on January 1, 1995 with 123 member countries. The Council for Trade in Goods (Goods Council), which is made up of representatives from all WTO member countries, is responsible for the GATT. The current chair is Ambassador Choi Kyonglim from the Republic of Korea. The Goods Council has 10 committees that address subjects including agriculture, market access, subsidies and anti-dumping measures.

GATT Trade Rounds

The GATT held eight rounds in total from April 1947 to September 1986, each with significant achievements and outcomes. The first round occurred in Geneva, Switzerland and included 23 countries. The main focus in this original round was tariffs, and it established tens of thousands of tax concessions affecting over $10 billion in trade. In April 1949, the second round of GATT was held 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, which resulted 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 involved 62 countries. Approximately $40 billion of tariff concessions were the result of this round, and important discussions were held on 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 subjects beyond tariffs were included in the main agenda, including intellectual property, agriculture and dispute settlement. This meeting led to the creation of the WTO.