General Agreement on Tariffs and Trade (GATT 1947)

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The General Agreement on Tariffs and Trade (GATT 1947) was an international treaty signed on October 30, 1947, and came into effect on January 1, 1948. It was established to promote international trade by reducing trade barriers such as tariffs and quotas. GATT 1947 was the first multilateral agreement aimed at liberalizing global trade and played a significant role in shaping the global trading system.

Key features of GATT 1947 included the most-favored-nation (MFN) principle and the principle of national treatment. The MFN principle required that any advantage, favor, privilege, or immunity granted by a member country to one trading partner should be extended to all other member countries. This principle aimed to ensure non-discrimination among trading partners. The principle of national treatment required that imported and domestically produced goods be treated equally, without any discriminatory measures favoring domestic production.

GATT 1947 operated under a consensus-based decision-making system, where decisions were made through negotiation and consultation among member countries. It facilitated multiple rounds of negotiations known as “trade rounds,” with the most notable being the Uruguay Round, which concluded in 1994.

One of the major achievements of GATT 1947 was the reduction of tariffs on industrial goods through successive rounds of negotiations. It played a crucial role in promoting post-World War II economic recovery and fostering economic cooperation among nations. However, it had limited provisions for addressing non-tariff barriers, such as subsidies and intellectual property rights, which became increasingly important in the global trading system.

GATT 1947 served as the foundation for the creation of the World Trade Organization (WTO) in 1995. The WTO incorporated GATT 1947 as an integral part of its structure and expanded its scope to include services, agriculture, and intellectual property. While GATT 1947 itself is no longer in force, its principles and provisions continue to shape the rules governing international trade under the auspices of the WTO.

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