General Agreement on Tariffs and Trade Is
General Agreement on Tariffs and Trade (GATT) is an international treaty that was established in 1947 to promote trade among nations by reducing tariffs and other trade barriers. It is considered one of the most significant achievements in the history of international trade and has played a crucial role in promoting economic growth and development across the globe.
The primary objective of GATT is to open up trade by reducing barriers such as tariffs, quotas, and other discriminatory measures. This objective is achieved through a series of negotiations between member countries that aim to lower trade barriers and encourage the flow of goods and services across borders.
One of the most notable achievements of GATT is the reduction in tariffs on industrial goods. Since the establishment of GATT, the average tariff rate for industrial goods has decreased significantly, from an average of 40% in the 1940s to around 4% in recent years. This reduction has contributed to the growth of the global economy by enabling countries to access new markets and achieve economies of scale.
Another significant achievement of GATT is the establishment of the Most-Favored-Nation (MFN) principle. The MFN principle stipulates that any trade concession offered by a country to another member of GATT should be extended to all other members. This principle ensures that countries do not discriminate against each other in trade, leading to a more level playing field for all participants.
GATT was replaced by the World Trade Organization (WTO) in 1995, but the principles and objectives of GATT continue to guide international trade today. The WTO has continued the work of GATT by facilitating negotiations among member countries and enforcing trade rules and regulations.
In conclusion, the General Agreement on Tariffs and Trade is a crucial international treaty that has played a significant role in promoting economic growth and development across the globe. By reducing trade barriers and promoting free trade, GATT has enabled countries to access new markets and achieve greater economic prosperity. The principles and objectives of GATT continue to guide international trade under the World Trade Organization.