Slide 1: General Agreement on Tariffs and Trade Slide 2: The General Agreement on Tariffs and Trade (GATT) was first signed in 1947.
To provide an international forum
That encouraged free trade between member states
By regulating and reducing tariffs on traded goods
Providing a common mechanism for resolving trade disputes. GATT ??? : GATT ??? Was the outcome of the failure of negotiating governments to create the ITO
The Bretton Woods Conference introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II
As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions
Once the ITO failed in 1950, only the GATT agreement was left. A Treaty, not an Organization Objective : Objective The GATT's main objective was the “Reduction of Barriers to International Trade”
This was achieved through the Reduction of
Subsidies on trade through a series of agreements History : History 3 Phases
First Phase , from 1947 until the Torquay Round
A second phase, encompassing three rounds, from 1959 to 1979
The Third phase, consisting only of the Uruguay Round from 1986 to 1994 First Phase : First Phase Commodities which would be covered by the agreement and freezing existing tariff levels Second Phase : Focused on reducing tariffs Second Phase Third Phase : Third Phase Extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born. ROUNDS : ROUNDS ROUNDS CONT… : ROUNDS CONT… ROUNDS CONT… : ROUNDS CONT… Did GATT succeed? : Did GATT succeed? Slide 13: Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average
Trade growth consistently out-paced production growth
The rush of new members during the Uruguay Round demonstrated recognition of multilateral trading system as the anchor for development and an instrument of economic and trade reform. But……. : But……. Slide 15: GATT’s success in reducing tariffs to a low level, with a series of economic recessions 1970-80’s drove governments to devise other forms of protection for sectors facing increased foreign competition
High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade
Both these changes undermined GATT’s credibility and effectiveness. Slide 16: The problem was not just a deteriorating trade policy environment.
By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s
World trade had become far more complex and important than 40 years before
The globalization of the world economy was underway
Trade in services — not covered by GATT rules
Ever increasing international investments Slide 17: Factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted.
That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO. Thank You : Thank You