GATT Full Form

In the realm of international trade, GATT, which stands for the General Agreement on Tariffs and Trade, played a significant role in shaping global commerce. In this blog, we’ll delve into what GATT is, GATT full form, its history, and the reasons behind its transformation into the World Trade Organization (WTO). We’ll explore the purpose, functions, benefits, and limitations of GATT, shedding light on the conferences that shaped its course. Let’s journey through the evolution of GATT and its enduring impact on international trade relations.

What is GATT?

GATT, the General Agreement on Tariffs and Trade, was a multilateral treaty established in 1947. It aimed to promote international trade by reducing tariffs and removing barriers to commerce between member countries. GATT laid the foundation for a rules-based system governing trade relations among nations.

History of GATT

The General Agreement on Tariffs and Trade (GATT) has a fascinating history that dates back to the aftermath of World War II. Here’s a brief overview of the key milestones in the history of GATT:

1. GATT 1947: GATT was established in 1947 as a result of the Bretton Woods Conference, which aimed to rebuild the global economy after the devastation of World War II. GATT was conceived as a provisional agreement to promote international trade and reduce tariffs, aiming to stimulate economic recovery and foster peace through economic cooperation.

2. Early Negotiation Rounds: In the early years, GATT conducted several negotiation rounds, known as “Gatt 1947” and “Gatt 1949,” focused on tariff reductions among its original 23 member countries.

3. The Kennedy Round (1964-1967): The Kennedy Round was a significant negotiation effort under GATT that took place in the 1960s. It aimed to address non-tariff barriers and promote international trade further. During this round, an anti-dumping code was introduced to regulate the imposition of anti-dumping measures on imports.

4. The Tokyo Round (1973-1979): The Tokyo Round was the first negotiation effort to address trade issues beyond tariffs, including subsidies, anti-dumping measures, and non-tariff barriers. This round led to the adoption of several agreements to regulate various trade practices.

5. The Uruguay Round (1986-1994): The Uruguay Round was the most extensive negotiation effort in GATT’s history, spanning eight years. It aimed to further liberalize global trade and address emerging trade issues, including services, intellectual property rights, and agriculture. The Uruguay Round culminated in the establishment of the World Trade Organization (WTO) in 1995.

6. Transformation into the WTO: As the complexities of international trade grew, GATT faced limitations in addressing new trade challenges comprehensively. In 1995, GATT transformed into the World Trade Organization (WTO) to provide a more comprehensive framework for global trade, encompassing services, intellectual property, and trade-related investment issues.

GATT Full Form

The full form of GATT is the “General Agreement on Tariffs and Trade.” GATT was a multilateral treaty established in 1947 to promote international trade and economic cooperation among member countries. Its primary objective was to reduce tariffs and trade barriers to foster a more open and liberal trading environment. GATT played a significant role in facilitating economic growth, promoting fair trade practices, and providing a rules-based framework for conducting international trade. Over time, GATT’s negotiation rounds brought about trade liberalization, leading to increased market access and economic opportunities for member nations. Eventually, GATT evolved into the World Trade Organization (WTO) in 1995, expanding its scope to address broader trade issues and ensure a more comprehensive and effective system for global trade relations.

Why GATT Changed to WTO?

As the complexities of global trade increased, GATT’s limitations became apparent. In 1995, GATT was transformed into the World Trade Organization (WTO) to address broader trade issues, including services and intellectual property rights. The WTO provides a more comprehensive platform for dispute settlement and trade rule enforcement.

Purpose of GATT

The purpose of the General Agreement on Tariffs and Trade (GATT) was to promote international trade and foster economic cooperation among nations. Here are the key points on the purpose of GATT:

1. Trade Promotion: GATT aimed to promote international trade by reducing tariffs and trade barriers among member countries. It sought to create a more open and liberal trading environment, encouraging the exchange of goods and services across borders.
2. Tariff Reduction: One of the primary objectives of GATT was to lower tariffs on imports and exports. By reducing tariffs, GATT aimed to enhance market access for products from member countries, facilitating increased trade volumes.
3. Non-Discrimination: GATT upheld the principle of non-discrimination in trade relations. The most-favored-nation (MFN) principle ensured that any advantage, favor, privilege, or immunity granted to one country must be extended to all other GATT member countries.
4. Fair Trade Practices: GATT sought to promote fair trade practices and discourage discriminatory or protectionist measures that could impede international trade. It aimed to create a level playing field for all member countries.
5. Rules-Based Trading System: GATT provided a rules-based system for conducting international trade. The agreement established clear rules and procedures for trade negotiations, dispute settlement, and the handling of trade issues.
6. Economic Stability and Growth: By facilitating international trade and reducing trade barriers, GATT aimed to foster economic stability and growth among member countries. Increased trade volumes were expected to contribute to economic development and prosperity.
7. Conflict Resolution: GATT served as a platform for member countries to engage in trade negotiations and resolve trade disputes peacefully. It provided a mechanism for addressing trade-related conflicts without resorting to retaliatory measures.
8. Global Cooperation: GATT aimed to promote global cooperation and understanding among nations through economic interactions. It sought to build bridges and promote dialogue among countries with diverse economic interests.
9. Post-War Reconstruction: GATT was established in the aftermath of World War II to aid in the reconstruction of war-torn economies. It played a vital role in stimulating economic recovery and fostering peace through economic cooperation.
10. Prevent Protectionism: GATT’s rules and principles aimed to prevent member countries from resorting to protectionist measures, such as excessive tariffs or import quotas, which could lead to trade wars and hinder economic growth.

Functions of GATT

GATT functioned as a forum for negotiations on trade policies, enabling member countries to engage in trade talks and reach agreements. It facilitated trade liberalization through rounds of negotiations, seeking mutual concessions to enhance economic cooperation.

Benefits of GATT

The benefits of the General Agreement on Tariffs and Trade (GATT) were as follows:

1. Increased Trade Volumes: GATT’s tariff reductions and trade liberalization efforts led to increased trade volumes among member countries, promoting economic growth and prosperity.
2. Economic Growth: By fostering a more open and liberal trading environment, GATT contributed to economic growth and development in member nations.
3. Job Creation: Increased trade resulting from GATT’s efforts created new job opportunities and enhanced labor markets in member countries.
4. Market Access: GATT’s tariff reductions provided improved market access for products and services from member countries in international markets.
5. Fair Trade Practices: GATT promoted fair and transparent trade practices, discouraging discriminatory or protectionist measures that could hinder international commerce.
6. Peaceful Dispute Resolution: GATT’s dispute settlement mechanism offered a peaceful means to resolve trade conflicts, preventing the escalation of trade disputes into larger conflicts.
7. Stability and Predictability: GATT’s rules-based trading system provided stability and predictability in international trade relations, fostering a conducive environment for economic activities.
8. Global Economic Cooperation: GATT encouraged global economic cooperation and understanding among member countries, facilitating collaboration and partnerships.
9. Supporting Developing Nations: GATT’s efforts to reduce trade barriers benefited developing nations, providing them with enhanced access to international markets and promoting economic growth.
10. Reduced Price Inflation: By reducing tariffs on imported goods, GATT helped control price inflation, benefiting consumers and enhancing purchasing power.

Limitations of GATT

Despite its accomplishments, GATT had limitations. It lacked enforcement mechanisms, and its focus on merchandise trade limited its ability to address emerging trade issues comprehensively.

Conferences held by GATT

GATT hosted several rounds of negotiations, including the Kennedy Round in the 1960s and the Uruguay Round in the 1980s, which led to significant trade liberalization.

Is GATT still in Effect?

With the establishment of the WTO in 1995, GATT ceased to exist as an independent entity. However, the principles and agreements formed under GATT continue to be the foundation of the WTO’s rule-based trading system.

How Many Countries Were in GATT?

Throughout its existence, GATT had a membership that grew from 23 countries in 1947 to 125 countries by the time it transformed into the WTO in 1995.

Year	Number of Countries in GATT
1947	23
1948	23
1949	23
1950	23
1951	26
1952	26
1953	26
1954	26
1955	26
1956	26
1957	26
1958	26
1959	26
1960	26
1961	26
1962	26
1963	26
1964	47
1965	49
1966	55
1967	64
1968	68
1969	76
1970	76
1971	80
1972	96
1973	107
1974	105
1975	107
1976	108
1977	114
1978	117
1979	116
1980	118
1981	121
1982	122
1983	123
1984	126
1985	127
1986	120
1987	123
1988	128
1989	128
1990	122
1991	125
1992	119
1993	117
1994	128
1995	128

Conclusion

GATT, the predecessor of the WTO, was a milestone in international trade cooperation. It facilitated global economic growth, reduced trade barriers, and paved the way for rules-based trade relations. While GATT evolved into the WTO to address new trade challenges, its legacy endures in shaping the principles of modern global trade, promoting fair and equitable commerce among nations.

Also read: NATO Full Form

FAQs on GATT

What is GATT?

GATT stands for the General Agreement on Tariffs and Trade. It was a multilateral treaty established in 1947 to promote international trade by reducing tariffs and barriers between member countries.

Why did GATT change to WTO?

GATT transformed into the World Trade Organization (WTO) in 1995 to address broader trade issues, including services and intellectual property rights, and to provide a more comprehensive platform for dispute settlement and rule enforcement.

What was the purpose of GATT?

The primary purpose of GATT was to foster international trade by reducing trade barriers, such as tariffs and quotas, and promoting fair trade practices among member nations.

What were the functions of GATT?

GATT served as a forum for trade negotiations, enabling member countries to engage in talks and reach agreements. It facilitated trade liberalization through various negotiation rounds.

What were the benefits of GATT?

GATT's multilateral trade agreements brought benefits such as increased trade volumes, economic growth, job creation, and a framework for resolving trade disputes peacefully.

What were the limitations of GATT?

GATT lacked enforcement mechanisms and focused primarily on merchandise trade, limiting its ability to address emerging trade issues comprehensively.

What conferences were held by GATT?

GATT hosted several negotiation rounds, including the Kennedy Round in the 1960s and the Uruguay Round in the 1980s, leading to significant trade liberalization.

Is GATT still in effect?

GATT ceased to exist as an independent entity in 1995 when it transformed into the WTO. However, the principles and agreements formed under GATT continue to be the foundation of the WTO's rule-based trading system.

How many countries were in GATT?

GATT's membership grew from 23 countries in 1947 to 125 countries by the time it transformed into the WTO in 1995.