GENERAL AGGREMENT ON TRADE TARIFF

INDIA & GATT

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 industry.

2.It gives revenue to the government

TARIFF

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 with World Bank ,IMF and WTO.

The primary actions of organization were to freeze and reduce tariff levels on various commodities.

GATT

• 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 countries.

•GATT played a prominent role in settlement of trade 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 trade.

 • 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

Objectives• Raising standard of living

• Ensuring full employment & a large & steadily growing volume of real income & effective demand

• Developing full use of the resources of the world

• Expansion of production & international trade

1 Trade negotiations under GATT

2 Safeguards 3 Trade negotiations among developing countries 4 Solves Trade Disputes. 

Functions of GATT

Safeguards• The agreement also provides proper safeguards for the domestic industry and trade.• 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.

Principles of GATT1. 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 more imports.

PhasesDivided into 3 phases:• First:From 1947 until the Torquay RoundLargely concerned which commodities would be covered by the agreementFreezing existing tariff levels• Second:From 1959 to 1979Focused on reducing tariffs• Third:Consists only of the Uruguay Round from 1986 to 1994It extended the agreement to new areas such as intellectual property, services , capital, and agricultureFinal outcome was creation of WTO

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