What Is the General Agreement on Tariffs and Trade (Gatt) Role

GATT was first discussed at the United Nations Conference on Trade and Employment in Havana, Cuba (1947), where the idea of creating the International Trade Organization (ITO) was proposed (see United Nations). It was hoped that the ILO would complement the World Bank and the International Monetary Fund (IMF) in promoting international economic cooperation. While more than 50 countries were negotiating the ILO and organizing its founding charter, preparatory meetings on GATT were held. After several meetings, Canada and 22 other countries signed gatt on October 30, 1947 in Geneva, Switzerland. The Agreement entered into force on 1 January 1948. It was initially considered as an interim agreement to be replaced by ITO. After the withdrawal of the United States from the ILO in 1950, the focus was on GATT (see also Globalization). While regular trade negotiations between Member States were conducted and refined, eight multilateral trade conferences (so-called rounds) were held between 1947 and 1994 (see International Trade). Gatt was created in 1947 during the first cycle, followed by subsequent rounds in Annecy, France (1949), and Torquay, England (1951). All other rounds were held in Geneva in 1956, 1960/62 (Dillon Round), 1964/67 (Kennedy Round), 1973/79 (Tokyo Round) and 1986/94 (Uruguay Round). The most influential group was the informal quadrilateral group, or the so-called «quad», which emerged at the beginning of GATT`s history. The group included Canada, Japan, the United States and the European Union – the largest trading companies in the world at the time.

With the Quad, most of the reciprocal GATT tariff reductions were introduced, which reduced tariff rates for all GATT countries in accordance with the most-favoured-nation principle. Quad biking became a more formal alliance at the 1981 G7 summit in Montebello, Quebec. It had the most influence during the Uruguay Round when it prioritized agricultural negotiations and pushed for the creation of the WTO. Reforms in politically sensitive sectors of world trade may therefore be more feasible as part of a global package – a good example is the Uruguay Round agreement on agricultural trade reform. The International Monetary Fund (IMF) is an international organization founded on July 22, 1944 at the Bretton Woods Conference and created on December 27, 1945, when 29 countries signed the Imf`s Articles of Agreement. Originally, it had 45 members. The IMF`s stated objective was to stabilize exchange rates and support the reconstruction of the global international payment system after World War II. Through a quota system, countries pay money to a pool from which countries with payment imbalances can temporarily borrow funds. Through these and other activities, such as monitoring the economies and policies of its members, the IMF strives to improve the economies of its members.

The IMF describes itself as «an organization of 188 countries working to promote global monetary cooperation, ensure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.» The Gatt was founded more than a year before the North Atlantic Treaty Organization (NATO), a Western military alliance, and played an important role in the Cold War that began shortly after World War II. It helped the US-led capitalist West expand its influence by liberalizing trade through multilateral agreements. The West, with which Canada was allied, gained more economic allies through these agreements, which strengthened its global influence over the communist Eastern bloc under the leadership of the Soviet Union. After the Cold War, with the collapse of the Soviet Union in 1991, the GATT transformed into a truly global organization – the WTO – and included former communist bloc countries such as the Czech Republic, Poland and Romania. The average level of tariffs for the main GATT participants in 1947 was about 22%. [4] As a result of the first rounds of negotiations, tariffs in the GATT core of the United States, the United Kingdom, Canada and Australia were reduced compared to other parties and non-GATT participants. [4] In the Kennedy Round (1962-67), the average tariff level of GATT participants was about 15%. [4] After the Uruguay Round, tariffs were below 5%. [4] Did this mean that rounds of bargaining were the only way to succeed? No. In 1997, the sector`s one-on-one meetings in the fields of telecommunications, information technology and financial services were successfully concluded. The summit almost led to a third organization.

It would become the very ambitious International Trade Organization (IBA). The 50 countries that started negotiations wanted it to be an agency within the United Nations that creates rules not only for trade, but also for employment, commodity agreements, trade practices, foreign direct investment and services. The ITO Charter was passed in March 1948, but the U.S. Congress and lawmakers in some other countries refused to ratify it. In 1950, the Truman administration declared defeat and ended the ITO. In May 1963, ministers agreed on three negotiating objectives for the round: GATT was provisional with limited scope, but its success in 47 years in promoting and securing the liberalization of much of world trade is undeniable. .

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