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GATT (General Agreement on Tariff and Trade)
- 2. GATT Formed in 1947. General Agreement on Tariffs and Trade (GATT) was a legal agreement between many countries. Main Objectives:- • Reduction of barriers to international trade. • Achieved through reduction of • Tariff barriers, • Quantitative restrictions.
- 3. PRINCIPLE MFN Clause Trade without Discrimination Transparency Reciprocity
- 7. GATT ROUNDS • There were total 8 rounds of negotiations between the participating countries. • The first 6 rounds were related to curtailing tariff rates, 7th round included the non-tariff obstacles. • This 8th round known as “Uruguay Round”.
- 8. Round Year Venue Issues and Outcomes I 1947 Geneva (Switzerland) Signature on first GATT agreement II 1949 Anesi (France) Tariff reductions on specific products III 1950- 51 Torquay (England) Tariff reductions on specific products IV 1956 Geneva V (Dillion Round) 1960-61 Geneva Induction of European Community for the first time & 20% tariff reduction. VI (Kennedy Round) 1964 – 67 Geneva 33% reduction is restrictions on manufactured goods.
- 9. VII (Tokyo Round) 1973 – 79 Geneva Non-tariff restrictions, etc. VIII (Uruguay Round) 1986 – 93 Punta Del Este(Beginning in Uruguay and closing at Geneva) Agriculture, Service, TRIPS, TRIMS, related issues
- 10. URUGUAY ROUND The main objectives of the Uruguay Round were: 1. To reduce agricultural subsidies 2. To lift restrictions on foreign investment 3. To begin the process of opening trade in services like banking and insurance. 4. To include the protection of intellectual property. Started in 1986
- 11. DRAFT
- 12. ARTHUR DUNKEL: Director-General of the GATT during 1980-1993. He prepared a document called “Dunkel Draft”, the draft put together the results of negotiations and provided an arbitrated solution to issues on which negotiators failed to agree. Even though the United States and India continued to bargain for changes to the Dunkel Draft, only minor amendments were made in the sphere of agriculture. The Dunkel Draft was accepted and became the foundation of the World Trade organization.
- 13. CRITICISM The following are the Criticism of GATT:- 1. Slow Dispute Settlement mechanism. 2. Formation of Regional Blocks. 3. Most develop countries took their own Commitments Non-Seriously. 4. Negotiation Tactics 5. Un-necessarily pressuring UDC
- 14. CONCLUSION Due to Inherit LOOP Holes in system of GATT later on it was abolished and turned into WTO.
- 15. Difference between GATT and WTO GATT GATT was a provisional agreement by contracting parties with no legal enforcement power. GATT only included trade in goods. GATT had no provisions to settle trade disputes. . WTO WTO is a binding permanent agreement by members. WTO additionally includes trade in services, international investments and intellectual property rights. WTO set up a dispute settlement body and disputes are quickly resolved.
Editor's Notes
- MFM clause i.e. Most favoured nation Clause. Then fundamental principle of GATT was that each member nation must open its markets equally to every other member nation—ANY sort of discrimination was prohibited.
- Between 1947 and 1995, there were 8 rounds of negotiations between the participating countries. The first 6 rounds were related to curtailing tariff rates, 7th round included the non-tariff obstacles. The 8th round was entirely different from the previous rounds because it included a number of new subjects for consideration. This 8th round known as “Uruguay Round” became most controversial. The discussions at this round only gave birth to World Trade Organization (WTO).