gatt (general agreement on trade & tariffs)

8/3/2019 GATT (General Agreement on Trade & Tariffs)

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General Agreement on Tariffs and Trade


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INTRODUCTION

GATT is the short form for General Agreement on

Trade and Tariffs. It was Multilateral Agreement

signed by 23 nations which laydown certain rules for

conducting International Trade. It was established on

1st January 1948 .At this time it was considered as

interim agreement to fill the gap of International

Trade Organization(ITO).

GATT was transformed into a WTO with effect from

January 1995 .


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OBJECTIVES

Its important objectives

1. Raising standard of living.

2. Ensuring full employment and a large and a steadilygrowing volume of real income and effective demand

3. Developing full use of the resources of the world.

4. Expansion of production and international trade.


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Basic Principles of GATT:

1. The Most Favored Nation(MFN) clause:

It implies that any reduction in the import duties of a GATT

member must be applied simultaneously and unconditionally to imports

from all other GATT countries. It applies similarly to duties on exports. This

rule basically requires non-discrimination in trade policies.

2. The use of tariffs :

Although GATT does not specially encourage protection through tariff it

does permit the protection of domestic industries through import tariff.

The GATT contains a clause which stabilizes the tariff of member

countries so as to prevent disturbance of trade flows by frequent

change in import duties.


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3. Tariff bargaining :

The principal supplier of a certain product should ask importing countriesto reduce tariffs on that product. In return, those countries would expect

counter offers, and negotiations would continue till satisfactory

agreement was reached.

The Kennedy Round negotiations witnessed the use of new technique

linear bargaining.


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4. Consultation:

A basic principle of GATT is that member-countries should consult one

another on trade matters and problems.

They can call on GATT for a fair settlement of cases in which they feel that

their rights under the GATT are being withheld or compromised by other

members.

5. Quantitative restrictions:

Quantitative restriction on trade, such as imports quotas and importlicensing, are strictly forbidden by the GATT unless when they become

necessary to reinforce domestic output restriction measures in agriculture and

fisheries or to apply standards and other technical regulations.


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FUNCTIONS OF GATT:

NEGOTIATIONS UNDER GATT

SAFEGUARDS

TRADE NEGOTIATIONS AMONG DEVELOPING COUNTRIES


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THE URUGUAY ROUND:

Uruguay round is the name which the eight and the latest round of the

multilateral trade negations (MTN) held under the auspices of GATT is

popularly known as UR because it was launched in Uruguay in September

1986.

It access for NAMA Products in the developed country

Discussion taken place in following areas

Trade in services

TRIPS

TRIMS

Following the UR agreement GATT was converted from a provisional

agreement into a formal international organization called WTO with

effect from Jan 1 1995


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GATT AND WTO:

Following the UR Agreement, GATT was converted from a provisional

agreement into a formal international organization called World Trade

Organization with the effect from January 1 1995. WTO now serves as a single

institutional frame work encompassing GATT and all the results of the Uruguay

Round.

The old GATT system allowed under what was known as the grandfather

of clause, existing domestic legislation to continue even if it violated a GATT

agreement that a member country had accepted by be in a signatory to GATT.


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DIFFERENCE BETWEEN GATT AND WTODIFFERENCE BETWEEN GATT AND WTO

GATT was adhoc and

provisional.

GATT had contracting parties.

GATT system allowed existingdomestic legislation to

continue even if it violated a

GATT agreement.

GATT was less powerful,

dispute settlement system

was slow and less efficient, its

ruling could be easily block

WTO and its agreements are

permanent.

WTO has members.

WTO does not permit this.

WTO is more powerful than

GATT, dispute settlement

mechanism is faster and more

efficient, very difficult to block the

rulings.


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CONCLUSION


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THANK YO

U

gatt (general agreement on trade & tariffs)

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