The GATT agreement of 1947, otherwise known as the General Agreement on Tariffs and Trade, was a landmark treaty that sought to foster international trade and eliminate trade barriers. It was created in the aftermath of World War II, as countries sought to rebuild their economies and establish a global framework for economic cooperation.
The GATT agreement was signed by 23 countries in Geneva, Switzerland, on October 30, 1947. Its primary objective was to reduce tariffs and other trade barriers, such as quotas and subsidies, that had hampered international trade for decades. By lowering trade barriers, the agreement aimed to increase the flow of goods and services between countries, which would encourage economic growth and development.
The GATT agreement established a set of rules and principles for international trade that were designed to promote fairness and cooperation among member countries. These rules included the most-favored-nation principle, which stipulated that member countries must extend to one another the same trade privileges that they extend to their most-favored trading partners. This provision ensured that no country would be unfairly disadvantaged in trade negotiations.
Another key provision of the GATT agreement was the rule against discriminatory tariffs, which prohibited member countries from imposing tariffs on imported goods that were higher than those imposed on domestically produced goods. This provision helped to level the playing field for international trade, making it easier for businesses to compete on a global scale.
Over the years, the GATT agreement underwent several rounds of negotiations and revisions, as member countries sought to address new challenges and opportunities in international trade. In 1995, the GATT was replaced by the World Trade Organization (WTO), which continues to provide a framework for international trade negotiation and cooperation.
Despite its many successes, the GATT agreement has faced criticism from some quarters for its failure to address issues such as labor and environmental standards, which are becoming increasingly important in the global economy. However, the agreement remains a significant milestone in the history of international trade, and its legacy continues to shape the global economy today.