Loading the player...

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

The General Agreement on Tariffs and Trade was formed in 1948 after World War II. GATT is an international trade treaty designed to boost countries' economic recovery following WWII. GATT's primary purpose 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 Jan. 1, 1948, and 23 countries signed it. GATT has been refined since its initial introduction and eventually led to the creation of the  World Trade Organization on Jan. 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 Canadian Ambassador Stephen de Boer. 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 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, countries exchanges 5,000 more tax concessions.

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 percent. 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 worldwide. 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 1973, 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.

RELATED TERMS
  1. General Agreement On Tariffs And ...

    The General Agreement on Tariffs and Trade (GATT) was created ...
  2. Multiple Column Tariff

    A multiple column tariff is a system where the tariff rate or ...
  3. Rounding Top

    A rounding top is a chart pattern used in technical analysis ...
  4. A Round Financing

    When startups pursue the next level of funding after seed capital, ...
  5. Series A Financing

    Series A financing is the first round of financing undergone ...
  6. Tax Exporting

    Tax exporting is the practice of one jurisdiction or country ...
Related Articles
  1. Insights

    A Brief History of International Trade Agreements

    Since the mercantilist era, world trade has become increasingly multilateral, but since WW2 there has been a definite rise in regional trade agreements.
  2. Investing

    What Is the World Trade Organization?

    The World Trade Organization (WTO) sets the global rules of trade. But what exactly does it do and why do so many oppose it?
  3. Insights

    3 Times the WTO Got It Right This Century

    Learn how the World Trade Organization (WTO) is facilitating landmark trade agreements that benefit both corporations and consumers.
  4. Insights

    How to Explain Trump-Era Tariffs to Clients

    Trump's tariffs are predicted to impact domestic stocks, domestic bonds and foreign stocks. As an advisor, you should be prepared to answer questions.
  5. Insights

    The Basics Of Tariffs And Trade Barriers

    Everything you need to know about trade barriers and tariffs, why they are used and their effects on the local economy.
  6. Insights

    The Dark Side Of The WTO

    The World Trade Organization has its share of detractors. Find out why this international entity has such harsh critics.
  7. Insights

    IMF, WTO and World Bank: How Do They Differ?

    Understand what IMF, WTO and the World Bank are, how they differ, and why some people question their motives.
  8. Insights

    Trump Looks to Throw WTO Rulebook out the Window

    A string of bad trade agreements leads President Trump to explore drastic measures.
  9. Investing

    E*TRADE: With Tariffs Official, Best to Take a Wait-and-See Approach

    With tariff proposals now signed by President Donald Trump, investors are best served taking a wait-and-see approach, advised E*TRADE.
  10. Investing

    US Futures Plunge After China Retaliates to Trump Tariffs

    Beijing’s announcement took stock markets by surprise, causing the likes of Boeing, Ford and General Motors to fall in pre-market trading.
RELATED FAQS
  1. Which countries have the highest tariffs?

    Find out which countries have the most restrictive import tariffs on international products, based on data collected by the ... Read Answer >>
  2. What are common reasons for governments to implement tariffs?

    Gain a basic understanding of a government-sanctioned import tariff, what it is meant to accomplish and common reasons for ... Read Answer >>
  3. How do tariffs protect domestic industries?

    Understand how tariffs are used by domestic government to protect its domestic industries, how they are levied, and whether ... Read Answer >>
  4. How does Federal Trade Commission use the Herfindahl-Hirschman Index to evaluate ...

    Understand specific examples of domestic products that rely on protective tariffs to survive. Learn about the varying tariff ... Read Answer >>
  5. If left in place long term, what problems does protectionism cause for a country?

    Discover the problems caused by international trade protectionism and why economists support free trade, and review the infamous ... Read Answer >>
Trading Center