The paper 'General Agreements on Trade and Tariffs " is a perfect example of business coursework. The General Agreements on Trade and Tariffs (GATT) was formed by a few countries in 1947 and grew consistently to become a global body that oversaw trade agreements amongst the contracting countries. The GATT enabled the formulation of various trade agreements that involved the reduction of tariffs as well as the elimination of import quotas. The series of agreements that took place all over the world were aimed at fine-tuning the rule of trade engagements between countries who were party to the agreement (Ayenagbo, et al.
2011). The GATT had the intention of creating an alternative body for handling the trading part of international cooperation. It was formulated at a time when the nations of the world were smarting from the Second World War, and there was a need to have in place an economic oriented global body that would join the two Bretton kinds of wood institutions namely: the World Bank and the international monetary fund. The GATT was to later be converted to WTO in 1995 with expanded scope and more members (World Trade Organization, 2004) This essay aims at reviewing the terms that led to the formation of the GATT as well as their historical background.
It will describe the accomplishments of the agreements and the manner in which the body differs with the world trade organization. The General Agreement on Tariffs and Trade (GATT) The GATT refers to a number of multilateral agreements on trades whose objectives is to set in motion the scraping of import quotas and the reduction of tariffs among the countries under the agreement (World Trade Organization 2004).
The GATT was formulated in 1947 in Geneva Switzerland with an initial membership of 23 countries with an intention of elevating it to a United Nations agency late in 1948. When the formation of the trade agreement by the United Nations agency failed to take place, the tenement was improved and further made larger in a set of agreements (Ayenagbo, et al. 2011). The formation of the multilateral agreements was meant to direct the efforts of the cooperating countries to notably, the Bretton woods institutions, the World Bank and the International Monetary Fund.
It was later to become one of the most effective trade liberalization instruments, by playing a part in the expansion of world trade in the latter part of the twentieth century. Before its replacement by world trade organization in 1995, the GATT had a membership of 125 countries reflecting 90 percent of the world trade (Karacaovali, 2013). The most important principle of the GATT was that of engaging in trade without any discrimination, whereby each member was bound by the agreement to open its markets to trade to each other (Karacaovali, 2013).
As stated in the unconditional most favored clause, it meant that a nation and its biggest partners agreed to reduce or do away with a tariff, and then the agreement was going to apply to other members of the trade agreement. The agreements involved a number of tariffs specifically meant for contracting countries that represent the rates that each member country has consented to extend to the other countries (Mavroidis 2005).
Ayenagbo, K. et al. (2011). Analysis of the importance of general agreement on tariffs and trade (GATT) and its contribution to international trade. Journal of economics and international finance, 3(1), 13-28.
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Karacaovali, B. (2013). ‘Trade-diverting free trade agreements, external tariffs, and feasibility’, University of Hawaii at Manoa, Department of Economics Working Paper No. 13-21. SSRN Electronic Journal. doi: 10.2139/ssrn.2372226.
Mavroidis, P.C. (2005). The general agreement on tariffs and trade: A commentary. Oxford: Oxford University Press, USA.
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