I. The General Agreement On Tariffs and Trade (GATT)

I.
The General Agreement on Tariffs

And Trade (GATT)
The General Agreement on Tariffs and Trade,

known as the GATT, is one-third of the Bretton
Woods system that was created after World War
II to ensure a stable trade and economic world
environment. The International Monetary Fund
(IMF) and World Bank are the other two bodies
of the Bretton Woods system. While often
referred to as an international organization, the
GATT had a “defacto” role as an international
organization before the creation of the World
Trade Organization (WTO).
1
 The Basic Principles Of The
GATT
Most-favoured-Nation (MFN)
Treatment: This is the fundamental
principle of the GATT and it is not a
coincidence that it appears in Article 1 of
the GATT 1947. It states that each
contracting party to the GATT is required to
provide to all other contracting parties the
same conditions of trade as the most
favourable terms it extends to any one of
them, i.e., each contracting party is required
to treat all contracting parties in the same
way that it treats its “most-favoured-nation”.
2
Objectives
 To encourage full employment and large and

steadily growing volume of real income and
effective demand.
 To improve the world production and
exchange of goods.
 To ensure the full use of world resources.
 To ensure a steady improvement in the living
standards of people in member countries.
 To settle the disputes through consultation
within the framework of GATT.
3
GATT Rounds
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 - Torquay (England) Tariff reductions on specific
51 products
IV 1956 Geneva ______

V (Dillion Round) 1960 - Geneva Induction of European
61 Community for the first
time & 20% tariff
reduction.
VI (Kenedy Round) 1964 - Geneva 33% reduction is restrictions
67 on manufactured goods.
VII (Tokyo Round) 1973 - Geneva Non-tariff restrictions, etc.

79
VIII (Uruguay Round) 1986 - Punta Del Este Agriculture, Service, TRIPS,
93 (Beginning in TRIMS, related issues
Uruguay and
closing at Geneva) 4
Dunkel Proposals
 The 8th round GATT popularly known as Uruguay

round was started in September 1986. The
negotiations were expected to be concluded in 4 years
but on account of differences among participating
countries on certain critical areas, agreement could
not be reached. To remove this deadlock Mr. Arthur
Dunkel, Director General of GATT, compiled a very
detailed document, popularly known as Dunkel
Proposals. This proposal culminated into the Final Act
on December 15, 1993. India signed this proposal on
April 15, 1994. All 124 members the countries signed
on this agreement.
5
Defects of GATT
 1. No Enforcement Authority: The GATT has

attempted to prescribe an international code of
conduct in the sphere of trade. But there was no
enforcement authority to oversee the compliance of
GATT regulations by contracting parties and to
settle their trade disputes.
 2. Problems in the Formulation of General
Rules: The members of GATT are much diversify in
nature, they had varied in economic and political
motives and they were also at different stages of
development. These reasons created difficulty in
framing and implementing uniform general rules of
conduct concerning trade, tariffs and payment.
6
II. WORLD Trade
Organization (WTO)
 The Uruguay round of GATT (1986-93) gave birth to

World Trade Organization. The members of GATT
singed on an agreement of Uruguay round in April
1994 in Morocco for establishing a new organization
named WTO. It was officially constituted on January
1, 1995 which took the place of GATT as an effective
formal, organization. GATT was an informal
organization which regulated world trade since
1948.
 Contrary to the temporary nature of GATT, WTO is a
permanent organization which has been established
on the basis of an international treaty approved by
participating countries. It achieved the
international status like IMF and IBRD, but it is not
an agency of the United Nations Organization
(UNO).
7
Structure
The WTO has nearly 150 members accounting for

over 97% of world trade. Around 30 others are
negotiating membership. Decisions are made by
the entire membership. This is typically by
consensus. A majority vote is also possible but it
has never been used in the WTO and was
extremely rare under the WTO’s predecessor,
GATT. The WTO’s agreements have been ratified
in all members’ parliaments.
8
Objectives
 To improve the standard of living of people in

the member countries.
 To ensure full employment and broad increase
in effective demand.
 To enlarge production and trade of goods.
 To increase the trade of services.
 To ensure optimum utilization of world
resources.
 To protect the environment.
 To accept the concept of sustainable
development.
9
Functions
•To implement rules and provisions related to trade policy review

mechanism.
•To provide a platform to member countries to decide future
strategies related to trade and tariff.
•To provide facilities for implementation, administration and
operation of multilateral and bilateral agreements of the
world trade.
•To administer the rules and processes related to dispute
settlement.
•To ensure the optimum use of world resources.
•To assist international organizations such as, IMF and IBRD for
establishing coherence in Universal Economic Policy
determination.
10
WTO Ministerial Conference
Conference Year Place
I 9-13 Dec., 1996 Singapore
II 18-20 May 1998 Geneva (Switzerland)
III 30 Nov.-3 Dec., 1999 Seattle (USA)
IV 9-14 Nov., 2001 Doha (Qatar)
V 10-14 Sep., 2003 Cancun (Mexico)
VI 13-18 Dec., 2005 Hong Kong
VII 30 Nov.-2 Dec., 2009 Geneva

11
General Agreements on trade
in services (GATS)
 General Agreements on Trade in Services

(GATS) cover all internationally traded
services. Foreign services and service
suppliers would be treated at par with
domestic services and service suppliers.
But Governments may specify specific
Most-Favoured Nations (MFN)
exemptions.
12
Trade Related Aspects Of
Investment Measures
(TRIMs)
The agreement was the outcome of Uruguay

Round. It stipulates that there will be no
discrimination against the foreign investors in the
application of economic policies by the member
countries of WTO. There of restraints will be
placed by capital importing countries in respect of
sphere of investment, equity participation,
remittance of profits and repatriation of capital.
13
Trade Related Aspects Of
Intellectual Property Rights
(TRIPs)
• Copyright
• Trademarks
• Geographical indications
• Industrial designs
• Patents
• Integrated Circuits
• Trade Secrets
14
WTO Ministerial
Conferences
1. Seattle Conference
2. Doha Conference
3. Cancun Conference
4. Hong Kong Conference
15

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I.

The General Agreement on Tariffs

The General Agreement on Tariffs and Trade,

 To encourage full employment and large and

IV 1956 Geneva ______

VII (Tokyo Round) 1973 - Geneva Non-tariff restrictions, etc.

 The 8th round GATT popularly known as Uruguay

 1. No Enforcement Authority: The GATT has

 The Uruguay round of GATT (1986-93) gave birth to

The WTO has nearly 150 members accounting for

 To improve the standard of living of people in

•To implement rules and provisions related to trade policy review

Conference Year Place

I 9-13 Dec., 1996 Singapore

II 18-20 May 1998 Geneva (Switzerland)

III 30 Nov.-3 Dec., 1999 Seattle (USA)

IV 9-14 Nov., 2001 Doha (Qatar)

V 10-14 Sep., 2003 Cancun (Mexico)

VI 13-18 Dec., 2005 Hong Kong

VII 30 Nov.-2 Dec., 2009 Geneva

 General Agreements on Trade in Services

The agreement was the outcome of Uruguay

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