The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement that aimed to promote international trade by reducing or eliminating trade barriers such as tariffs, quotas, and subsidies. It was negotiated during the United Nations Conference on Trade and Employment in 1947 and came into effect on January 1, 1948.
The origins of GATT can be traced back to the international trade system of the 1930s, which was characterized by protectionist policies and economic nationalism. These policies contributed to the Great Depression and the outbreak of World War II. In order to promote economic recovery and prevent another global conflict, international leaders recognized the need for a more open and cooperative trade system.
The Bretton Woods Conference in 1944 laid the foundation for the post-war international economic system. The conference established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became the World Bank. However, it did not address international trade issues.
In 1945, the United States proposed the creation of an International Trade Organization (ITO) to promote free and fair trade. However, the proposal was never ratified by enough countries to become a reality. The failure of the ITO led to the signing of GATT in 1947 as a temporary measure until a more comprehensive trade agreement could be reached.
The original GATT agreement included 23 countries and was based on the principles of non-discrimination, most-favored-nation treatment, and the gradual reduction of trade barriers. The agreement was later expanded to include more countries, and new rounds of negotiations were held to further liberalize trade. The Kennedy Round of 1964-1967, for example, led to the elimination of many tariffs on industrial products.
GATT played a significant role in promoting global economic growth and reducing poverty. However, it faced criticisms for favoring developed countries and neglecting the needs of developing countries. The World Trade Organization (WTO) was established in 1995 to replace GATT and address these issues.
In conclusion, the General Agreement on Tariffs and Trade (GATT) was a landmark agreement that promoted international trade and economic cooperation. Its origins can be traced back to the post-World War II effort to establish a more open and cooperative trade system. While GATT faced criticisms, it laid the foundation for the modern global trade system and contributed to economic growth and development around the world.