Tariff or duty is a tax imposed by the government on an
imported good as it enters a country. Tariff does 2 things:
1.It adds on the cost of the imported item
and hence to the price of that imported item. It thus possibly
reduces the competitiveness of that item .
Thus tariff may act as a measure protecting the local
2.It gives revenue to the government
GATT the predecessor of the WTO, was born in
1948 as result of the international desire to liberalize
trade . It was set up on October 30,1947 in Geneva
with 23countries as its founder members.
India was the founder members of GATT along
withWorld Bank ,IMF and WTO.
The primary actions of organization were to freeze
and reduce tariff levels on various commodities.
• It was originally set up as a temporary
arrangements to bring about trade liberalization.
• It later became an important and permanent set-up
to attend to all trade issue among the members
•GATT played a prominent role in settlement of trad
e disputes between 2 countries.
• Free trade has been the motto of GATT.
• During the next nearly half a century 1948-1994 many
nations successively joined the agreements .There were 8
rounds of GATT trade negotiations in this period. Bringing
forth significant reductions in tariff and non-tariff barriers to
• GATT was created to be part of the international trade
organization(ITO),however ITO failed to be created so GATT
was left as an independent organization. In 1944 GATT was
taken over by WTO
• Raising standard of living
• Ensuring full employment & a large & steadily
growing volume of real income & effective
• Developing full use of the resources of the world
• Expansion of production & international trade
1 Trade negotiations under
3 Trade negotiations among
4 Solves Trade Disputes.
• The agreement also provides
proper safeguards for the domestic industry
• Article XIX of the General
Agreement permits a member country to
impose restrictions on imports or suspend
tariff concessions on products if they are
import excessive quantities and are causing
or threatening to cause serious injury to
competing domestic producers.
1. Trade without discrimination- Country granting
advantages(tariffs , subsidies) to one non GATT party
must grant the same advantage to other member
countries in export and import duties and changes.
Exceptions : incase of regional trading
arrangements and the developing nations.
2. Protection through tariffs- Protection to home
industries can be provided only through customs tariffs
and not through any other .
Exceptions: Developing nation where development need
Divided into 3 phases:
From 1947 until the Torquay Round
Largely concerned which commodities would be covered
by the agreement
Freezing existing tariff levels
From 1959 to 1979
Focused on reducing tariffs
Consists only of the Uruguay Round from 1986 to 1994
It extended the agreement to new areas such as intellectual
property, services , capital, and agriculture
Final outcome was creation of WTO