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General Agreement on

Trade and Tariffs(GATT)

y Group 1

1. Krishan Kant Issar

2. Abhishek Gupta3. Madhur Sibal

4. Neeraj Kumar

5. Abhinav yadav

6. Himanshu gautam7. Ashish kumar

8. Rahul Ramteke

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Origin of GATT

• The General Agreement on Tariffs and Trade (GATT) is a

multilateral agreement for regulating international trade

•

GATT came into force on 1

st

January, 1948 and lasted till 1993when it was replaced by WTO in 1995

• It was negotiated during the UN Conference on Trade and

Employment and was the outcome of the failure of

negotiating governments to create the International Trade

Organization (ITO)

• The original GATT text (GATT 1947) is still in effect under the

WTO framework, subject to the modifications of GATT 1994.

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Original Members

The 23 founding members were:

• Australia, Belgium, Brazil, Burma, Canada

• Ceylon, Chile, China, Cuba, Czechoslovakia

• France, India, Lebanon, Luxembourg

• Netherlands, New Zealand, Norway, Pakistan

• Southern Rhodesia, Syria, South Africa

• The United Kingdom and the United States.

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Main objectives of GATT

The main objectives were

• Reducing tariff barriers

• Eliminating discrimination in international trade

And were achieved using the following steps:

• Expansion of international trade

• Increase of world production by ensuring full

employment in the participating nations• Development and full utilization of world resources

• Raising standard of living of the world community as

a whole.

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Principles of GATT

The rules adopted by GATT were based on the

following fundamental principles:

• Trade should be conducted in a non-discriminatory way

• The use of quantitative restrictions should be

condemned• Disagreements should be resolved through

consultations.

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Director Generals Of GATT

Name Duration in the office Country

Eric Wyndham White 23 March 1965-6 May 1968

United Kingdom

Olivier Long 6 May 1968-1 October 1980

Switzerland

Arthur Dunkel 1 October 1980-1 July 1993

Switzerland

Peter Sutherland

1 July 1993-1 May 1995

(WTO) Ireland

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Rounds in GATT

Name Start Duration Countries Subject

Covered

Achievements

Geneva April 1946 7 months 23 Tariffs Signing of GATT, 45,000

tariff concessions

affecting $10 billion of

trade

Annecy April 1949 5 months 13 Tariffs Countries exchanged

some 5,000 tariff

concessions

TorquaySeptember

19508 months 38 Tariffs

Countries exchanged some

8,700 tariff concessions,

cutting the 1948 tariff

levels by 25%

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Rounds in GATT(cont.)

Name Start Duration Countries Subject covered Achievements

Geneva II January 1956 5 months 26Tariffs, admission of

Japan

$2.5 billion in tariff

reductions

Dillon September

1960 11 months 26 Tariffs

Tariff concessions

worth $4.9 billion of

world trade

Tokyo September

1973 74 months 102

Tariffs, non-tariff measures,

"framework"

agreements

Tariff reductionsworth more than

$300 billion dollars

achieved

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Rounds in GATT(cont.)

Name Start Duration Countries Subjects covered Achievements

Uruguay September

1986 87 months 123

Tariffs, non-tariff

measures, rules,

services, intellectual

property, disputesettlement, textiles,

agriculture, creation of

WTO, etc

• Creation of WTO

• Extended the range of trade

negotiations

• Major reductions in tariffs (about

40%) and agricultural subsidies

• an agreement to allow full access for

textiles and clothing from developing

countries

• an extension of intellectual property

rights.

Doha November

2001 ? 141

Tariffs, non-tariff

measures, agriculture,

labor standards,

environment,

competition, investment,

transparency, patents etc

The round is not yet concluded.

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The Tokyo Round

• It was the first try for reforming the trading

system

• It was conducted between 1973 and 1979

• 102 countries participated in this round

• Main highlight of this round was GATT's efforts to

progressively reduce tariffs

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Results of The Tokyo Round

• An average one-third cut in customs duties in the

world's nine major industrial markets

• Average tariff on industrial products was brought

down to 4.7%• Subsidies and countervailing measures

• Removal of Technical barriers to trades

• Streamlining Import licensing procedures• Formulation of Anti-dumping policies

• Facilitating Trade in Civil Aircrafts.

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The Uruguay Round(UR)

• It was the 8th round of multilateral trade negotiations

• It was the last and largest GATT round which lasted from1986 to 1994 and led to the WTO’s creation

• The meeting stalled on the issue of agriculture

• It was the biggest negotiating mandate on trade everagreed

The main objectives of this round were

• to reduce agricultural subsidies

• to put restrictions on foreign investment, and• to begin the process of opening trade in services

like banking and insurance

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Results of The Uruguay Round

• An umbrella agreement (The Agreement establishing the WTO)

• Agreements for each of the three broad areas of trade that the

WTO covers:

– Goods and investment (The Multilateral Agreements on Trade in

Goods including the GATT 1994 and the Trade Related Investment Measures (TRIMS))

– General Agreement on Trade in Services(GATS)

– Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS)• Dispute settlement (DSU)

• Agreement on Customs Valuation

• Reviews of governments' trade policies (TPRM)

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Main features of TRIMs

• All restrictions on foreign capital/ investors/companies

should be scrapped

• The foreign investor shall be given the same rights in the

matter of investment as a national investor• No restriction will be imposed on any area of investment

• Nor will there be any limitation on the extent of foreign

investment-even 100% foreign equity will be permitted

• Imports of raw materials and components will be allowed

freely

• Foreign investors will not be obliged to use local products

and materials

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Implications of The Uruguay Round

on Indian Foreign Trade

• Reduction in basic duty and export subsidies

– India promised to reduce the basic duty by 30% which

was to be effected over a period of 6 years and was to

cover raw materials, intermediates and capital goods.– This did not include agricultural products, petroleum

products, fertilizers and some non ferrous metals like

zinc and copper.

• GATT said that anti dumping proceedings would beterminated if the volume of dumped imports from a

particular country was less than 1% of the domestic

market. This helped India to protect its exports from anti-

dumping investigations.

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Replacement of GATT by WTO

The reasons for the birth of WTO are as follows:

• Reduced tariffs combined with a series of economic

recessions in the 1970’s and early 1980’s drove

governments to devise other forms of protection forsectors facing increased foreign competition.

• High rates of unemployment and constant factory

closures led governments in Western Europe and North

America to seek bilateral market-sharing arrangementswith competitors and to embark on a subsidies race to

maintain their holds on agricultural trade

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Replacement of GATT by

WTO(Cont.) • The General Agreement was clearly no longer as relevant to

the realities of world trade as it had been in the 1940s

• The globalization of the world economy was underway and

trade in services was not covered by GATT rules• In the field of agriculture, loopholes in the multilateral

system were heavily exploited

• Efforts at liberalizing agricultural trade met with little

successAll the reasons mentioned above convinced the GATT

members to reinforce and extend the multilateral system

and the effort led to the creation of World Trade

Organization(WTO)

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GATT vs WTO

GATT WTO

The GATT was a set of rules, a multilateral

agreement, with no institutional foundation,

only a small associated secretariat which

had its origins in the attempt to establish an

International Trade Organization in the

1940s.

The WTO is a permanent institution with its

own secretariat.

The GATT was applied on a "provisional

basis" even if, after more than forty years,

governments chose to treat it as apermanent commitment.

The WTO commitments are full and

permanent

The GATT rules applied to trade in

merchandise goods.

In addition to goods the WTO covers trade

in services and trade-related aspects of

intellectual property

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GATT vs WTO(Cont.)

GATT WTO

While GATT was a multilateral instrument, by

the 1980s many new agreements had been

added of a plurilateral, and thereforeselective, nature.

The agreements which constitute the WTO

are almost all multilateral and, thus, involve

commitments for the entire membership.

The WTO dispute settlement system is faster,

more automatic, and thus much less

susceptible to blockages, than the old GATT

system.

The implementation of WTO dispute findings

will also be more easily assured.

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