What Is the Gatt Trade Agreement

The General Agreement on Tariffs and Trade (GATT) is a trade agreement that was created in 1947 as an effort to prevent trade wars and promote global economic growth. GATT was replaced by the World Trade Organization (WTO) in 1995, but its principles still influence international trade today.

GATT was formed after World War II with the aim of reducing trade barriers and creating a more open and stable international trading system. The agreement was signed by 23 countries in Geneva in 1947 and became effective on January 1, 1948. Over the years, GATT membership grew to include over 100 countries.

One of the key principles of GATT was the Most-Favored-Nation (MFN) rule, which stipulated that any advantage, favor, privilege, or immunity given by one member country to another must be extended to all other members. This helped to ensure that trade was conducted fairly and without discrimination.

Another important principle of GATT was the elimination of tariffs, which are taxes on imported goods. GATT sought to reduce tariffs on a gradual basis and establish a multilateral system of trade rules. This meant that countries would not be able to impose tariffs or other trade barriers on one another, and that disputes between countries would be resolved through negotiation rather than retaliation.

GATT was highly successful in promoting international trade and economic growth. By the time it was replaced by the WTO, global trade had increased dramatically, and international tariffs had been reduced to historic lows.

Today, the principles established by GATT continue to underpin the global trading system. The WTO, which was established to replace GATT, builds on these principles and provides a forum for negotiations and dispute settlement.

In summary, the General Agreement on Tariffs and Trade (GATT) was a trade agreement created in 1947 to promote international trade and reduce trade barriers. Its principles, including the Most-Favored-Nation rule and the elimination of tariffs, helped to establish a more open and stable international trading system. While GATT was replaced by the WTO in 1995, its legacy continues to influence international trade today.