General Agreement on Tariffs and Trade (GATT)

Accord général sur les tarifs douaniers et le commerce
Acuerdo General sobre Aranceles Aduaneros y Comercio

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History

1 Jan 1948, Geneva (Switzerland), on coming into force of General Agreement on Tariffs and Trade, 1947 (GATT 1947), negotiated in 1947, at a conference convened from 21 Nov 1947, Havana (Cuba), and signed by 23 countries which were at the time engaged in drawing up a charter for a proposed International Trade Organization (ITO) -- Organisation internationale du commerce (OIC) -- Organización Internacional de Comercio (OIC) which would have been a specialized agency of United Nations (UN). The General Agreement, based largely on selected parts of the draft ITO charter, was concluded in order to get trade liberalization under way quickly, and was provided with only minimum institutional arrangements because it was expected that responsibility for it would soon be assumed by ITO. However, plans for ITO were abandoned when it became clear that its charter would not be ratified, and GATT was left as the only international instrument laying down trade rules accepted by nations responsible for most of the world's trade. In 1965, a new Part IV, on trade and development, was added to the text of the GATT. As part of its services to developing countries, GATT set up in May 1964 the International Trade Centre (ITC), which since 1968 has been jointly operated by GATT and United Nations Conference on Trade and Development (UNCTAD), the latter acting through the UN. Interim Commission for the International Trade Organization (ICITO/GATT) -- Commission intérimaire de l'Organisation internationale du commerce, set up Mar 1948, Geneva, to work on the proposed ITO, continued to exist 'de jure', from 1954 in the form of the GATT secretariat in Geneva; its members were the governments of 115 countries. Although not one of the financial institutions set up following the Bretton Woods Conference, 22 July 1944, Bretton Woods NH (USA), GATT is nevertheless sometimes included when referring to the Bretton Woods Institutions (BWIs). It operated as an autonomous organ within United Nations System, linked to United Nations Economic and Social Council (ECOSOC). Last Annual General Meeting: Dec 1994. As agreed in the Uruguay Round, World Trade Organization (WTO), was established 1 Jan 1995, on coming into force of the 'Marrakech Agreement'. The WTO includes the current General Agreement on Tariffs and Trade, 1994 (GATT 1994) and implements all the results of the negotiations. GATT as an institution co-existed with WTO until 31 Dec 1995, when it ceased to exist.

Aims

GATT is a multilateral treaty embodying reciprocal rights and obligations designed to achieve the objectives set out in the preamble to the Agreement; the Contracting Parties recognize that: their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily-growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods. The detailed undertakings set out in the Agreement, together with a body of case law built up by the Contracting Parties, constitute a general code of conduct covering virtually the whole of commercial relations of member countries. As well as providing a set of trade rules, and machinery for settling disputes, GATT is the forum for Contracting Parties (which account for 90 % of world trade) to work together for liberalization of trade.

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Activities

Functions as the principal international body concerned with negotiating reduction of trade barriers and with international trade relations. It is both a 'code of rules' and a 'forum' in which countries can discuss and overcome their trade problems and negotiate to enlarge world trading opportunities; similarly, it enables countries to negotiate and work together to reduce trade barriers, so as to further liberalize world trade. The fundamental principles of the General Agreement are: (i) 'Trade without discrimination', embodied in the 'most favoured-nation clause', by which all contracting parties are bound to grant to each other, treatment as favourable as they give to any country in the application and administration of import and export duties and charges. (ii) 'Protection through tariffs', meaning that where protection is given to domestic industry, it should be extended essentially through the customs tariff, and not through other commercial measures. (iii) 'A stable basis for trade', is provided by the binding of the tariff levels negotiated among the contracting parties; these bound items are listed, for each country, in tariff schedules which form an integral part of the General Agreement. (iv) 'Consultation, conciliation and settlement of differences'. (v) 'The waiver and possible emergency action', implying procedures whereby a country may, when its economic or trade circumstances so warrant, seek a derogation from particular GATT obligation(s) or provision(s) for emergency action in certain defined circumstances. (vi) 'Prohibition of quantitative restrictions on imports' (exceptions being either a cautious use of such restrictions in balance-of-payment difficulties or their use by developing countries in some special cases). (vii) 'Permission of regional trading arrangements', in which countries as a group agree to abolish or reduce barriers against imports from one another; since the General Agreement in Article XXIV recognizes the value of closer integration of national economies through free trade, this permission constitutes an exception to the general rule of most-favoured-nation treatment, and is admitted provided that certain strict criteria are met. Under the Protocol Relating to Trade Negotiations among Developing Countries (GATT Protocol), signed Dec 1971, and sponsored by GATT, each of the 17 signatories agreed to grant trade preferences to other participating countries on goods included in its list of concessions.

There have been 8 rounds of multilateral trade negotiations: 1947 in Geneva (Switzerland); 1949 in Annecy (France); 1951 in Torquay (UK); 1960-1962 in Geneva, the Dillon Round; 1964-1967 in Geneva, the Kennedy Round; 1973-1979 in Geneva, the Tokyo (Japan) Round (so called because the negotiations were launched at a Ministerial meeting in Sep 1973, Tokyo); 1987-1993 in Geneva, the Uruguay Round. The Tokyo Round produced the most comprehensive agreements of the rounds of negotiations, and 99 countries participated in this round. Negotiations were concluded, Nov 1979, with agreements covering: an improved legal framework for the conduct of world trade (including recognition of tariff and non-tariff treatment in favour of and among developing countries as a permanent legal feature of the world trading system); non-tariff measures (subsidies and countervailing measures; technical barriers to trade; government procurement; customs valuation; import licensing procedures; a revision of the 1967 GATT anti-dumping code); bovine meat; dairy products; tropical products; and an agreement on free trade in civil aircraft. The agreements contained provisions for special and more favourable treatment for developing countries. Participating countries also agreed to reduce tariffs on many industrial and agricultural products, the cuts to be implemented gradually, for the most part over a period of 7 years beginning 1 Jan 1980. Agreements improving the framework for the conduct of world trade took effect in Nov 1979. The other agreements took effect 1 Jan 1980, except for those covering government procurement and customs valuation, which took effect 1 Jan 1981, and the concessions on tropical products, which entered into force in 1977. The tariff reductions agreed in the Tokyo Round began 1 Jan 1980, and continued with equal annual cuts; the total reduction were made effective by 1 Jan 1987. Ministers of GATT Contracting Parties, meeting in Sep 1986, Punta del Este (Uruguay), agreed to launch an eighth trade round, now known as the 'Uruguay Round'.

The Trade Negotiations Committee (TNC), which oversees the Uruguay Round in its entirety, met at ministerial level in Montréal (Canada) on 5-9 Dec 1988, to conduct a mid-term review of the negotiations. Completed in Geneva on 5-8 Apr 1989, the mid-term review resulted in decisions which laid down clear directions for all the negotiating groups, including a minimum one-third goal in overall tariff cuts. Some early agreements were also reached, including: a trade-liberalization package covering US$ 20 billion of tropical products, the streamlining of GATT dispute settlement procedures, and the establishment of GATT Trade Policy Review Mechanism for conducting country reviews. Agreement was agreed in the agriculture group on a long-term objective of substantial progressive reduction in agricultural support and protection sustained over an agreed period of time. The work of the services group was substantially moved forward with the identification of some of the concepts and principles underlying a future draft framework agreement on trade in this sector. On 27 July 1989, TNC accepted an invitation from the European Community and Belgium to hold the final ministerial meeting of the Uruguay Round in Brussels (Belgium). On 20 Dec 1989, TNC agreed to hold this meeting on 3-7 Dec 1990. This latter meeting revealed disagreement between the European Community on the one hand and the USA and the Cairns Group on the other on liberalization of agricultural exchanges. Negotiations continued in 1991 and 1992. Finally, the seven-year Uruguay Round negotiations were completed at a meeting of TNC on 15 Dec 1993, in Geneva.

The General Agreement on Trade in Services provides for a new set of multilateral rules for the conduct of services trade. It simultaneously creates a framework for a continuing process of liberalization. Trade in intellectual property is also now the subject of a comprehensive set of new rules which should help to promote creative activities and innovation to safeguard investments in intellectual property. Agriculture too becomes subject to new disciplines designed to establish a fair and market-oriented agricultural trading system. Reductions in subsidies should lead to more suitable markets for farmers worldwide and create opportunities for governments to relieve excess burdens borne by taxpayers and consumers. Textiles and clothing also will be brought back under GATT disciplines, even if the process will take considerably longer than for other sectors. The results on the market access for goods represent a major milestone in the history of GATT. Tariffs are expected to have been reduced by around 40%. Of equally far reaching importance is the substantial rise in the security in the world trading system by virtue of the large increase in tariff bindings, not only but especially by developing countries, many of whom have undertaken wide-ranging economic reforms in recent years intended to achieve fuller integration with world markets. The Uruguay Round has gone further than any previous negotiations to extend and strengthen the rule of law in international trade, both by bringing GATT principles to apply in areas where they have been lacking, and by strengthening the existing rules, especially by ensuring their application through a more effective dispute settlement system. TNC approved the Chairman's proposal that 118 participating countries in the Uruguay Round agree that the texts contained in the Final Act (15 Dec 1993), including the detailed schedules of market access in goods and services to be submitted to the Secretariat, embody the results of their negotiations; acknowledge that the texts may be subject to rectifications of a purely formal character that will not affect the substance or meaning of the texts in any way; and indicate their intention to submit the relevant texts or legal instruments to be formulated on the basis of the Final Act for the consideration of their respective authorities with a view to seeking approval of, or other decisions on, the relevant texts or instruments in accordance with appropriate procedures in their respective jurisdictions. TNC approved a work programme to implement the results of the Uruguay Round and a Decision on Trade and Environment. Finally, it accepted and invitation by the Government of the Kingdom of Morocco to hold the Ministerial Conference to sign the Uruguay Round agreements at Marrakech (Morocco).

Included in the Uruguay Round from 1990 are 'Trade Related Intellectual Property Rights (TRIPs)' and 'Trade Related Investment Measures (TRIMs)'. Agreement Regarding International Trade in Textiles, otherwise known as Multi-Fibre Arrangement (MFA), entered into force 1974, extended 1977, 1982, 1986, 1991, 1993, expires 31 Dec 1994; signatories (44, representing 55 countries) together account for around 80 percent of world trade in textiles and clothing, although less than half this trade is subject to the provisions of the MFA. Textile Surveillance Body monitors this arrangement.

Agreements concluded under GATT auspices and not mentioned above:

 • International Convention to Facilitate the Importation of Commercial Samples and Advertising Material;

 • Agreement on Government Procurement;

 • Agreement on Import Licensing Procedures;

 • Agreement on Technical Barriers to Trade (Code de la normalisation);

 • Agreement on Trade in Civil Aircraft.

Structure

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Languages

English, French, Spanish.

Staff

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Financing

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Relations with Inter-Governmental Organizations

Relations with 52 inter-governmental organizations.
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Relations with Non-Governmental Organizations

Relations with 7 non-governmental organizations.
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Publications

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Members

Members in 134 countries
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Type I Classification

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Type II Classification

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Subjects *

  • Resources
    • Resources
  • Social Activity
    • Employment
    • Income
  • Commerce
    • Customs
    • Commerce
    • Trade
    • Merchandise
  • Industry
    • Production
  • Law
    • Arbitration
    • Agreements
  • Economics
    • Economic
  • International Relations
    • United Nations
  • Purpose
    • Purpose

UN Sustainable Development Goals **

GOAL 7: Affordable and Clean EnergyGOAL 8: Decent Work and Economic GrowthGOAL 12: Responsible Consumption and ProductionGOAL 16: Peace and Justice Strong Institutions

UIA Org ID

F0985

Last News Received

8. Feb 1994
* Subject classification is derived from the organization names and aims.
** UN SDGs are linked to the subject classification.

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