The General Agreement on Trade and Tariff, also known as GATT, has been a vital agreement for international trade since its creation in 1947. GATT is a multilateral agreement that outlines the rules and regulations for international trade, which has contributed to the growth of the global economy. The agreement covers various aspects of trade, including the reduction of tariffs and the elimination of trade barriers.
Under GATT`s provisions, countries are required to follow a set of rules and principles when conducting international trade. The GATT agreement promotes free trade by removing obstacles to trade, such as tariffs, subsidies, and quotas. Tariffs are taxes that countries impose on imported goods, making them more expensive and less competitive than locally produced goods. GATT requires that tariffs must be lowered to a certain level or eliminated entirely to help promote free trade.
GATT also promotes fair trade practices, which means that countries cannot engage in trade practices that distort competition or harm other countries` economies. Unfair trade practices include dumping, which is when a country exports products at prices lower than their production costs, and subsidies, which give a country`s companies an artificial advantage over their foreign competitors.
The success of GATT is evident in the significant reduction in tariffs and trade barriers over the years. Between 1948 and 1994, the average tariff rate on industrial products dropped from 40 percent to around 4 percent. This reduction in tariffs has led to increased international trade, which, in turn, has contributed to economic growth and development.
The most recent round of GATT negotiations was the Uruguay Round, which concluded in 1994. The Uruguay Round resulted in the creation of the World Trade Organization (WTO), which replaced GATT as the governing body for international trade. The WTO continues to build on the principles and rules established by GATT and works towards further liberalization of international trade.
In conclusion, the General Agreement on Trade and Tariff played a significant role in promoting free and fair trade globally. The reduction of tariffs and trade barriers has helped facilitate increased international trade, leading to economic growth and development. The principles and rules established by GATT continue to serve as a foundation for international trade, and the WTO builds on these principles to further promote free and fair trade globally.