GENERAL AGREEMENT ON TARIFFS AND

TRADE (GATT)

•Was signed in 1947;

•It is a multilateral trade agreement;
•Regulating trade among about 150
countries;
•According to its preamble, purpose of
GATT is “substantial reduction of tariffs
and other trade barriers and elimination of
preferences, on a reciprocal and mutually
advantageous basis”.
• GATT functioned de facto as an organization,
conducting eight rounds of talks addressing
various trade issues and resolving international
trade disputes.
• The Uruguay Round, completed on December
15, 1993 after 7 yrs of negotiations, resulted in
an agreement among 117 countries (including
U.S.) to reduce trade barriers and to create more
comprehensive and enforceable world trade
rules.
• The Final Act embodying the results of Uruguay
Round, was signed in April 1994.
• This agreement created the World Trade
Organization (WTO), which came into being on
January 1, 1995.
• GATT was the outcome of the failure of
negotiating governments to create the
International Trade Organization (ITO).

• The Bretton Woods Conference (1944) had

introduced the idea for an organization to
regulate trade as part of a larger plan for
economic recovery after World War II. As
governments negotiated the ITO, 23 negotiating
states began parallel negotiations for the GATT.

• Once the ITO failed in 1950, only the GATT

agreement was left.
Reasons for failure of ITO:
• ITO failed mainly because of unwillingness of
the United States to implement the same.
• It was contended that ITO is based on the
“unconditional most favored nation principle”. In
US, there was large opposition against the ITO
(which had already been ratified in several
countries), and thus President Truman never
even submitted it to the Congress.

However, despite the non-adoption of ITO, US,

UK and other developed nations were keen to
ensure reduction of trade barriers.
• Thus some of the participants in London
Conference on Trade and Employment
requested that simultaneously with the
continuing discussions of Trade Charter at
Geneva, extensive tariff and trade negotiations
be started.
• Now since implementation of GATT clauses
required parliamentary approval, in some
countries GATT could not be implemented.
• To overcome this difficulty a ‘Protocol of
Provisional Application’ (PPA) was signed in
late 1946 by 26 original members of GATT.
• This Protocol came into effect on January 1,
1948 and GATT was applied through this
protocol.
GATT can be divided into three phases:

• the first phase, from 1947 until the Torquay

Round, largely concerned with which all
commodities would be covered by the
agreement and freezing existing tariff levels.

• the second phase, encompassing three rounds,

from 1959 to 1979, focused on reducing tariffs.

• the third phase, consisting only of the Uruguay

Round from 1986 to 1994, extended the
agreement fully to new areas such as intellectual
property, services, capital, and agriculture. Out
of this round the WTO was born.
Rounds
GATT held a total of 8 rounds:
• Geneva Round - 1947 :The first round took
place in 1947 in Geneva. 23 countries
participated. The main focus of the round was
tariff concessions, around 45,000 in total.
• Annecy Round – 1950 :The second round took
place in 1949 in Annecy, France. 13 countries
participated. The main focus of the talks was
more tariff reductions, around 5000 in total.
• Torquay Round – 1951 :The third round
occurred in Torquay, England in 1951. 38
countries participated. 8,700 tariff concessions
were made.
• Geneva Round - 1955-1956 :The fourth round
returned to Geneva in 1955 and lasted until May
1956. 26 countries participated. $2.5 billion in
tariffs were eliminated or reduced.
• Dillon Round - 1960-1962 :The fifth round
occurred once more in Geneva and lasted from
1960 to 1962. The talks were named after U.S.
Treasury Secretary and former Under Secretary
of State, Douglas Dillon, who first proposed the
talks. 26 countries participated. Along with
reducing over $4.9 billion in tariffs, it also yielded
discussion relating to the creation of the
European Economic Community(EEC).
• Kennedy Round - 1964-1967 :The sixth round
was the last to take place in Geneva from 1964
until 1967 and was named after the late US
President Kennedy. 66 countries participated.
Concessions were made on $40 billion worth of
tariffs.

• Tokyo Round - 1973-1979 :Reduced tariffs and

established new regulations aimed at controlling
the proliferation of non-tariff barriers and
voluntary export restrictions. 102 countries
participated. Concessions were made on $190
billion worth.
• Uruguay Round - 1986-1993 :The
Uruguay Round began in 1986. 125
countries participated. It was the most
ambitious round to date, hoping to expand
the competence of the GATT to important
new areas such as services, capital,
intellectual property, textiles, and
agriculture.
• The Dunkel Draft Text or Dunkel
Package or Dunkel Draft Act embodying
the results of Uruguay Round was
released on 20th December 1991.
• The Uruguay Round concluded on 15th
Dec 1993 and as many as 125 countries
including India signed the Final Act on
April 15th 1994 at Marrakesh (Morocco).
• Thus, the General Agreement on Tariffs
and Trade (GATT) also known as the
Dunkel Agreement, finally emerged as
the World Trade Organization (WTO) in
1995.
Why GATT converted to WTO?
• GATT rules discriminated against
developing countries under the garb of
clauses such as “escape clauses”,
“safeguard rules”, “voluntary export
restraints”, “orderly agreements”.
• ‘Agriculture’ was treated as a special case
thus escaping GATT rules.
• Though developed countries removed
majority of tariff barriers yet some others
still remained affecting the interests of
developing countries.
• US and EEC had concluded several bilateral,
discriminatory and restrictive arrangements
outside GATT rules.
• “Safeguards” rules under GATT undermined the
effective working of GATT.
• Customs union and free trade areas permitted
under GATT had been distorted and abused.
• Though GATT was a mandatory body, it lacked
enforcing mechanism.
• Last but not the least, with the emergence of
more and more new developing countries, it was
felt that GATT rules devised half a century ago
had outlined their utility.
 THANK YOU !!
By:- Navneet Kaur
LLM Batch 2009-11
NALSAR University of Law,
Justice City, R.R. Dist.,
Shameerpet,
Hyderabad-500078 (A.P) India.