The General Agreement on Tariffs and Trade (GATT) was a plurilateral agreement among countries that aimed to promote international trade by reducing trade barriers and tariffs. It came into force on January 1, 1948, and was signed by 23 countries, including the United States, the United Kingdom, France, Germany, and Japan.
The GATT was created in the aftermath of World War II, when many countries began erecting protectionist barriers to shield their economies from foreign competition. The goal of the agreement was to promote free trade and economic growth by reducing tariffs and other trade barriers that hindered the flow of goods and services across borders.
The GATT was based on a set of principles, including the Most Favored Nation (MFN) principle, which required countries to extend their lowest tariffs to all other members of the GATT. This ensured that all countries were treated equally and that no member received preferential treatment.
Another key principle was the Principle of Reciprocity, which required countries to reduce tariffs and other trade barriers in exchange for similar concessions from other members. This principle helped to ensure that all members benefited equally from the reduction of trade barriers.
Over the years, the GATT underwent several rounds of negotiations, resulting in the reduction of tariffs and other trade barriers in goods such as agriculture, textiles, and services. The final round of negotiations, known as the Uruguay Round, was concluded in 1994 and resulted in the creation of the World Trade Organization (WTO).
While the GATT was effective in promoting free trade and economic growth, it faced criticism from some quarters. Critics argued that it favored developed countries at the expense of developing countries and that it put too much emphasis on reducing tariffs, rather than addressing other barriers to trade such as subsidies and non-tariff barriers.
Despite these criticisms, the GATT remains an important milestone in the history of international trade. It paved the way for the creation of the WTO and set the stage for the current era of globalization and international trade.
In conclusion, the General Agreement on Tariffs and Trade came into force on January 1, 1948, and was a landmark achievement in the history of international trade. Its principles of free trade and reciprocity helped to promote economic growth and reduce trade barriers, and its legacy continues to be felt today.