General Agreement On Tariffs And Trade (GATT) – Defined
The General Agreement on Tariffs and Trade (GATT) was formed in Geneva 1947 (to be effective from 01 Jan 1948) to promote free trade between the contracting countries. It is a multilateral trading system for goods, services and intellectual property. It provides open and fair international trade rules and gradual reduction of tariffs, subsidies and duties. It was signed by 23 countries and was in effect from 1948 to 1995 before creation of World Trade Organization (WTO) on 01 Jan 1995. GATT has successfully reduced average tariffs on manufactured goods from 40 percent to around 5 percent in the developed or industrial nations.
GATT Trade Rounds
The GATT conducted a total of eight trade rounds in from April 1947 to September 1986. All the rounds had significant achievements and positive outcomes.
The first round occurred in Geneva, Switzerland in 1948 and included 23 countries. This round successfully established multiple tax concessions affecting over $10 billion worth of trade. In April 1949, the second round of GATT was held in Annecy, France with 13 countries involved, where around 5,000 more tax concessions were exchanged.
In April 1949, the third round of GATT in Torquay, England involved 38 countries where nearly 9,000 tariff concessions were agreed thereby reducing many tax levels by up to 25%. The fourth and fifth rounds of GATT were held again at Geneva in January 1956, and September 1960 respectively where 26 countries were involved (including Japan who was included for the first time). The outcome of these rounds resulted in reduction of tariffs of $2.5 billion and 4.9 billion respectively.
Further in 1964, the sixth round of GATT was held again in Geneva with 62 countries involved which resulted in approximately $40 billion of tariff concessions along with other critical discussions on reduction of predatory pricing policies known as dumping.
The seventh round of GATT which was held in Tokyo in 1973, with involvement of 102 countries achieved $300 billion in global tariff concessions.
The last round (eighth round) of GATT was held in 1986 in Uruguay where other topics than tariffs were discussed as part of main agenda like property, agriculture and dispute settlement. This meeting also led to the formation of the WTO.
Reference for GATT