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    Purpose: Trade Protectionism Great Depression

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    USM TV
    The General Agreement on Tariffs and Trade (GATT) was created in 1947 to promote international trade and economic recovery following World War II. Its key provisions included most favored nation status, prohibiting quotas and other trade restrictions except in special circumstances, and developed countries agreeing to eliminate tariffs on imports from developing nations. GATT underwent several negotiation rounds that reduced tariffs and expanded trade rules over subsequent decades, and ultimately led to the formation of the World Trade Organization in 1994 which incorporated GATT's agreements and expanded its scope.

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    Purpose: Trade Protectionism Great Depression

    Uploaded by

    USM TV
    19 views2 pages
    The General Agreement on Tariffs and Trade (GATT) was created in 1947 to promote international trade and economic recovery following World War II. Its key provisions included most favored nation status, prohibiting quotas and other trade restrictions except in special circumstances, and developed countries agreeing to eliminate tariffs on imports from developing nations. GATT underwent several negotiation rounds that reduced tariffs and expanded trade rules over subsequent decades, and ultimately led to the formation of the World Trade Organization in 1994 which incorporated GATT's agreements and expanded its scope.

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    The General Agreement on Tariffs and Trade (GATT) was created in 1947 to promote international trade and economic recovery following World War II. Its key provisions included most favored nation status, prohibiting quotas and other trade restrictions except in special circumstances, and developed countries agreeing to eliminate tariffs on imports from developing nations. GATT underwent several negotiation rounds that reduced tariffs and expanded trade rules over subsequent decades, and ultimately led to the formation of the World Trade Organization in 1994 which incorporated GATT's agreements and expanded its scope.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    19 views2 pages

    Purpose: Trade Protectionism Great Depression

    Uploaded by

    USM TV
    The General Agreement on Tariffs and Trade (GATT) was created in 1947 to promote international trade and economic recovery following World War II. Its key provisions included most favored nation status, prohibiting quotas and other trade restrictions except in special circumstances, and developed countries agreeing to eliminate tariffs on imports from developing nations. GATT underwent several negotiation rounds that reduced tariffs and expanded trade rules over subsequent decades, and ultimately led to the formation of the World Trade Organization in 1994 which incorporated GATT's agreements and expanded its scope.

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    Purpose

    The purpose of GATT was to eliminate harmful trade protectionism. That had
    sent global trade down 65 percent during the Great Depression. GATT restored
    economic health to the world after the devastation of the depression and World
    War II.

    Three Provisions

    GATT had three main provisions. The most important requirement was that each
    member must confer most favored nation status to every other member. All
    members must be treated equally when it comes to tariffs. It excluded the special
    tariffs among members of the British Commonwealth and customs unions. It
    permitted tariffs if their removal would cause serious injury to domestic
    producers.

    Second, GATT prohibited restriction on the number of imports and exports. The
    exceptions were:

     When a government had a surplus of agricultural products.


     If a country needed to protect its balance of payments because its foreign
    exchange reserves were low.
     Emerging market countries that needed to protect fledgling industries.

    In addition, countries could restrict trade for reasons of national security. These
    included protecting patents, copyrights, and public morals.

    The third provision was added in 1965. That was because more developing
    countries joined GATT, and it wished to promote them. Developed countries
    agreed to eliminate tariffs on imports of developing countries to boost their
    economies. It was also in the stronger countries' best interests in the long run. It
    would increase the number of middle-class consumers throughout the world.

    History

    GATT grew out of the Bretton Woods Agreement. The summit at Bretton Woods
    also created the World Bank and the International Monetary Fund to coordinate
    global growth.

    The summit almost led to a third organization. It was to be the highly ambitious
    International Trade Organization. The 50 countries that started negotiations
    wanted it to be an agency within the United Nations that would create rules, not
    just on trade, but also employment, commodity agreements, business
    practices, foreign direct investment, and services. The ITO charter was agreed to
    in March 1948, but the U.S. Congress and some other countries' legislatures
    refused to ratify it. In 1950, the Truman Administration declared defeat, ending
    the ITO.

    At the same time, 15 countries focused on negotiating a simple trade agreement.


    They agreed on eliminating trade restrictions affecting $10 billion of trade or a
    fifth of the world’s total. Under the name GATT, 23 countries signed the deal on
    October 30, 1947. It was put into force on June 30,1948. GATT didn’t require the
    approval of Congress. It was technically just an agreement under the provisions
    of U.S. Reciprocal Trade Act of 1934. It was only supposed to be temporary until
    the ITO replaced it.

    Throughout the years, rounds of further negotiations on GATT continued. The


    main goal was to further reduce tariffs. In the mid-1960s, the Kennedy round
    added an Anti-Dumping Agreement. The Tokyo round in the seventies improved
    other aspects of trade. The Uruguay round lasted from 1986 to 1994 and created
    the World Trade Organization.

    GATT and WTO

    GATT lives on as the foundation of the WTO. The 1947 agreement itself is
    defunct. But, its provisions were incorporated into the GATT 1994 agreement.
    That was designed to keep the trade agreements going while the WTO was
    being set up. So, the GATT 1994 is itself a component of the WTO Agreement.

    Member Countries

    The original 23 GATT members were Australia; Belgium; Brazil; Burma, now
    called Myanmar; Canada; Ceylon, now Sri Lanka; Chile; China; Cuba;
    Czechoslovakia, now Czech Republic and Slovakia; France; India; Lebanon;
    Luxembourg; Netherlands; New Zealand; Norway; Pakistan; Southern Rhodesia,
    now Zimbabwe; Syria; South Africa; the United Kingdom and the United States.
    The membership increased to more than 100 countries by 1993.

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