The General Agreement on Tariffs and Trade (GATT) 1994 is an international treaty that establishes rules and principles for international trade. It was created to promote and facilitate the liberalization of global trade by reducing barriers such as tariffs and quotas.
GATT 1994 is an updated version of the original GATT, which was signed in 1947. The main purpose of GATT 1994 is to provide a legal framework for the regulation of international trade, promote the principles of non-discrimination, and encourage the progressive reduction of trade barriers.
Key provisions of GATT 1994 include:
- Most-Favored-Nation (MFN) Treatment: MFN requires that any advantage, favor, privilege, or immunity granted by a country to any product originating from another country must be extended to all other countries. This principle aims to ensure equal treatment among trading partners.
- National Treatment: National treatment means that imported and domestically produced goods should be treated equally once they enter a country’s market. It prevents discrimination against imported products in favor of domestic products.
- Tariff Bindings: GATT 1994 provides a mechanism for countries to negotiate and agree upon binding commitments to limit their maximum tariffs on imported goods. These bindings create predictability and stability for traders by ensuring that tariffs will not be raised beyond the agreed-upon levels.
- Dispute Settlement: GATT 1994 establishes procedures for resolving trade disputes between member countries. It encourages consultations and negotiations to settle disputes, and if these efforts fail, it allows for the establishment of dispute settlement panels to make binding rulings.
- Trade in Services: GATT 1994 covers trade in goods as well as trade in services. It encourages countries to liberalize their service sectors and avoid discriminatory measures against foreign service providers.
GATT 1994 played a crucial role in promoting global trade and formed the basis for the creation of the World Trade Organization (WTO) in 1995. The WTO took over the administration and further development of the rules and principles established under GATT, while also addressing additional areas of trade such as intellectual property rights, agriculture, and trade-related investment measures.