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What is the full form of GATT

GATT: General Agreement on Tariffs and Trade

GATT stands for General Agreement on Tariffs and Trade.

The General Agreement on Tariffs and Trade (GATT) is an international treaty that was created to promote trade by lowering or removing trade restrictions like quotas and duties. The "substantial reduction of duties as well as other trade obstacles and the removal of privileges, on a balanced and cooperative relationship basis" was its stated goal in the introduction.

The GATT was created due to the inability of the discussing states to establish the International Trade Organization, and it was originally addressed during the United Nations Conference on Trade and Employment. On October 30, 1947, 23 countries signed it at Geneva, and it went into effect with a proviso on January 1, 1948. It lasted until January 1, 1995, when the World Trade Organization (WTO) was founded as a component of the Uruguay Round Agreements following an agreement by 123 countries in Marrakech on April 15, 1994. The initial GATT law (GATT 1947) remains in effect within the WTO system, according to the changes of GATT 1994. The WTO is the replacement for the GATT.

GATT Full Form

Prior to joining, countries must fulfill the requirements outlined in particular treaties which were not parties to the GATT in 1995; as of September 2019, there were 36 countries on this list.

Tariffs were successfully reduced under the GATT and its successor, the WTO. Just after the Uruguay Round in 1999, the main GATT nations' average tariff levels fell to 5% from over 22% in 1947. According to specialists, GATT and the WTO are partly to blame for these tariff revisions.


A global trade agreement is the General Agreement on Tariffs and Trade. Nine rounds of international trade discussions were held between 1947 and 1995, and they resulted in updates to the document. In 1995, the WTO essentially took over its function in global commerce.

The United States intended to create a number of post-war global organizations in the 1940s, one of which would be dedicated to the revival of international commerce. The United States initiated active measures to create such an organization in 1945 and 1946 by suggesting a meeting to write a charter for a trade organization. The International Trade Organization (ITO), was one of the plans put out during the 1947 United Nations Conference on Trade and Employment (UNCTE), this was where the GATT initially came to be. The ITO was designed to work with the World Bank and IMF. Over 50 nations had conversations about the ITO and establishing its founding charter, but these negotiations kept falling apart when the United States left.

GATT was not an organization; it was a pact between nations to become contractual parties for their economic well-being and to engage in free and fair trade practices. It was a multilateral trade agreement that emphasized the member nations' shared rights and responsibilities for the management of international commerce.

With the aim of facilitating economic growth, creating jobs, and raising life quality, it provided the entire globe with the necessary common rules of behavior for fair and free trading activities. It made it easier for the member nations to treat one another as the Most Favoured Nations (MNF).

The nations that signed this agreement were of the understanding that conflicts and economic obstacles would be settled by cooperation rather than conflict. This spirit of cooperation constituted a huge accomplishment since the member nations made up the majority of global commerce.

Our natural tendency is to battle and dominate, and we have been doing this either to obtain or hold onto financial benefits. However, the destruction brought on by the last two world wars has transformed our understanding of supremacy.

Our intellectual development has led us to employ increasingly sophisticated strategies for acquiring economic dominance, including the use of technology and business. The use of military power is a backup plan to prevent any mishaps by others.

The past war taught us an important lesson: in order to survive in this increasingly complicated world, we must work together, and the only way to solve all of our issues is through strong economic policy.

Therefore, all nations, large and small, are currently looking for methods to improve their economic standing since doing so will increase their connection and mutual benefit, which will create the ideal environment for commerce and growth. The partnership has replaced conflict. The world's nations today significantly rely on commerce for their economic prosperity, which has rendered every one of them reliant on each other.

The necessity to control this flow of products and services has been our concern for an extended period of time, especially since the early 1930s when global leaders started debating the notion of creating a single platform for the control of worldwide commerce. As stated before in this post, global commerce is nothing more than the aggregate amount of both imports and exports; thus, one's import is someone else's export. The first step in this approach was made by the allies in 1944, during the war.

GATT's Organization

Under the guidance of a Director General, the secretariat of the GATT was formed, and it comprised around 350 individuals.

The headquarters of GATT is situated in Switzerland. Its funding came from the participating nations. Depending on each nation's percentage of the overall commerce between the contractual parties and their affiliated countries, the personal contributions of an individual are calculated. The average international business data for the most recent three years was used to estimate each nation's contribution.

For the nations whose trade value was 0.12% or less of the overall trade value of the client and the contractor, the minimum investments were 0.12%. The donations in 1980 totaled 39,830,000 Swiss francs, while the expenditure in 1987 was 42 million dollars.

The General Council was a prominent platform where the member nations functioned jointly in regular meetings annually in Geneva. Its role was to monitor the practical aspects of the treaties as well as the decision-making and policy measures of the executive agency.

The council of delegates, founded in 1960, mostly handled the ordinary and essential activities of the GATT during the intervals between annual meetings.

If the discussion was not in conference, the authorities adopted the postal ballot standards for obtaining the members' approval before reaching a decision and/or sent the suggestions to representatives by postal ballot to obtain their consent before reaching a decision. The whole council was not permitted to make any judgments that required the implementation of universal suffrage in participating countries.

In addition, the council might create panels of specialists, management committees, or departments. This council received reports of every offense against GATT rules.

To ensure fair representation, the council established an advisory committee in 1975, which consisted of eighteen high-ranking officials chosen by member countries' governments. This committee also kept cooperation with the IMF.

The Dispute Settlement Body, which had the power of the General Councils and the adapted committees of the linked pact, was given jurisdiction over any issues falling under the purview of the GATT (s).

GATT's participation is based on an agreement signed by several governments; hence, the member countries are the governments, not specific people. The nation was known as the contracting nation when it became a participant.

Only eight nations were applying the pact when it first went into effect on 1ST January 1948, but as time went on, the participation increased to 95 contractual parties, plus 29 more nations that continued to use the GATT in practice while waiting for a decision.

Any autonomous sovereign nation might request GATT membership, but to join, they would have to abide by the terms of the treaty rules and provide the other nations with what they would expect in return. Voters were asked to accept the recommended conditions of the new participant, and a majority of GATT participants had to agree.

Under the terms of GATT, developing nations received special privileges. Two-thirds of the GATT signatories were developing countries, according to the December 31st, 1994 report, and the GATT provided strong protection for their economic development.

They participated fully in GATT operations, and the Tokyo round prioritized the development of these nations' commercial activity due to GATT's intentional efforts. The general treaty's fourth article, which covers developing country concerns, was introduced in 1965.

The basis of the agreement is laid out in the following section. Developed nations agreed not to demand payments from developing nations that were beyond line with those nations' unique commercial, economic, and innovation requirements.

The Tokyo Round also established two new subcommittees, the first of which was committed to reviewing any new protectionist actions undertaken by developed nations against imported goods from developing nations, and the second of which was tasked with looking at the exchange issues faced by the least developed nations.

To help developing nations with trade advice and information on trade and investment, GATT founded the International Trade Center in 1964.

This center offered guidance and information on export markets and promotional strategies, advised developing nations in designing and implementing their export promotion programs, and trained staff from such countries in these tasks.

Conferences Conducted Under the GATT Since 1947

Since its founding, several trade agreement sessions have taken place. The tariff and non-tariff agreements reached have significantly increased global commerce and contributed to the overall health of the markets of contracting nations.

The GATT's basic agreement, which established the required framework for international trade discussions, attempted to eliminate import duties and obstacles. It also regulates issues related to such operations. The fundamental goal of these discussions was for all contractual parties to work toward mutual MFN status with each other.

The GATT's Functions

The GATT pact included 38 primary articles, each dealing with a different topic.

Article No. I

In that, every participating nation must ensure MFN status for all other contracting nations. This represents the essence of the pact. Under this agreement, any "benefit, favor, privilege, or protection" a GATT nation grants to another party concerning immigration taxes, transactions, and procedures associated with imports and exports should immediately be provided to all GATT nations as well.

Article No. II

This included information on all trade deals that contracting nations had accepted due to different GATT-sponsored trade negotiation meetings.

Article No. III

This law forbade the use of internal tariffs to defend domestic goods from imports.

Article No. VI

The topic of this was anti-dumping codes. In this article, "dumped" items were widely defined as imports that were offered for sale at a price lower than the producer's local market price.

As protection against goods that have been imported, the affected party may impose anti-dumping charges to take some of its contents into accordance with applicable sections of the code on subsidies and counteractions.

Article No. VII

This item, which was broken into subsections including regulations, management, discussions, conflict resolution, and specific provisions for discriminatory action, concerned the gross amount.

GATT Full Form

GATT and World Trade Organisation (WTO)

The GATT was revised in 1993 (known as "GATT 1994") to add new requirements for its partners. The World Trade Organization's establishment was among the most significant shifts. On January 1, 1995, the 76 GATT members who were already in existence and the European countries were recognized as pioneers of the World Trade Organization. In the next two years, the remaining 51 GATT nations re-joined the World Trade Organization (the last was Congo in 1997). Since the World Trade Organization's establishment, 33 additional non-GATT countries have joined, and 22 more are now in membership discussions.

The WTO currently has 164 members, including Liberia and Afghanistan, as the most recent additions as of 2018.

Syria, Lebanon, and the SFR Yugoslavia are the only initial GATT countries that have not yet re-joined the world trade organization. Since FR Yugoslavia (later known as Serbia and Montenegro and divided in two during participation discussions) is not considered a direct contracting state to the Socialist Federal Republic of Yugoslavia, its membership is viewed as a new (non-GATT) application. On May 4, 2010, the World Trade Organization's General Council decided to create a joint committee to look into Syria's application for new members. On December 31, 1995, the parties that established the World Trade Organization officially terminated the "GATT 1947" conditions. While Serbia is in the decision-making phase of the negotiations and is anticipated to join the World Trade Organization in the coming years, Montenegro became a participant in 2012.

While the GATT was a series of international agreements, the World Trade Organization is an international body with its own offices, personnel, and objectives that covers intellectual property rights as well as trade in commodities and related services. Although it was intended to support global contracts, multilateral deals led to preferential trading and participant dispersion over multiple rounds of GATT talks, especially the Tokyo Round. Trade agreements often use the GATT's global deal resolution procedure.

Effects On Trade Liberalization

In 1947, the leading GATT members' average tariff rates were around 22%. By the Kennedy round (1962-1967), members of the GATT had an average tariff rate of roughly 15%. The Uruguay Round resulted in duties of less than 5%.

The early GATT's involvement in trade liberalization included enabling imposed import duties reductions in addition to "involve securing openness and transparency of trade regulatory changes; binding the agreements tariff rate reductions for a longer period of time (resulting in more establishment in 1955); introducing the general statement of equal treatment through most-favored-nation (MFN) treatment and national treatment conditions; and offering a platform for future deals and the peaceful settlement of cooperation conflicts". All of these factors helped to organize global strategy, lower trade restrictions, and eliminate policy concerns.

GATT Exceptions

The GATT's prohibiting discrimination rules and earlier agreements like tariff bindings can be broken in several circumstances. These stand for legitimate deviations that are authorized or permitted by the GATT when carried out in accordance with the rules. Trade settlements and free trade area allowances are the two most significant exceptions.


Domestic import-competing businesses are protected by safeguard regulations (also known as escape clauses) if they can show the following two things:

  1. The increase in imports has disrupted the market for certain goods.
  2. The increase has seriously harmed or threatened to seriously harm domestic import-competing businesses.

When the word "serious injury" is used, it means that the harm must be more significant than the damage that AD and antisubsidy acts have caused. Safeguard measures are not seen as unjustified trade rules since trade booms are typically not thought to be under the authority of the exporting businesses or authorities.

Because a safeguard reaction requires stronger levels of safeguarding than in antidumping and antisubsidy proceedings, it will probably disagree with previously established bound import tariffs and so go against the GATT rules. There is an alternative option in Article 19 of the GATT, though, which allows for an exemption to the basic principles in this situation.

Countries are expected to compensate in some way since safeguard acts essentially revoke some of the privileges they have provided to others. Lowering duties on certain other goods is an example of appropriate compensation. Due to this additional need, as well as the requirement to show significant harm instead of material harm, the employment of protection proceedings is less frequent than that of antidumping and antisubsidy actions.

Free Trade Areas

Another such circumstance necessitates an alternative to the GATT standards. Numerous nations have chosen different routes toward trade liberalization. The GATT method, in which several nations concurrently lower their tariff barriers but not to zero, is known as the multilateral approach. The opposite strategy is known as regionalism, in which two or more nations decide to eliminate all tariffs and other trade obstacles but only amongst themselves. This strategy is known as a regional approach because, although it's not always the case, free trade agreements are frequently close by or, at the very least, substantial trade agreements.

A free trade agreement, in theory, involves the application of free markets to all goods traded between nations. Free trade zones frequently fall short in reality. First off, they are hardly put into practice right away; rather, they are adopted over a period of ten, fifteen, or even twenty years or more. As a result, several free trade zones (FTAs) are currently transitioning to more open business. Second, some commodities are occasionally excluded from liberalization under FTAs. Powerful democratic pressure from some domestic businesses is the reason for this. Favorable trade arrangements, or PTAs, are areas where a significant number of items are excluded.

Core principles of the GATT

Most-favored nation: The term "most-favored nation" (MFN) describes the nondiscriminatory management of similar or highly exchangeable commodities arriving from two different nations. For example, if the United States imposes a 2.6 percent tariff on imported printing press goods from the European Union (EU), a World Trade Organization representative, it must impose a 2.6 percent tax on all other WTO member nations' printing press imports. MFN is a bit misleading since it implies that one nation is most favored, whereas, in reality, it indicates that all nations are equally benefited because all countries must be considered equal.

The United States adopted the term "normal trade relations" (NTR) to be used in domestic law in the 1990s due to the complexities the word creates. When a new nation joins the WTO or if a non-WTO country is given access to the same import tariffs as its WTO partner nations, this phrase is a better way to describe what the nation is providing. As a result, MFN and NTR are the same concepts described in two different ways.

GATT Full Form

Trade Remedies

The term "trade remedies" refers to a significant category of exclusions. These regulations give domestic businesses the ability to ask for raises in import taxes that are imposed unfairly and at prices much above fixed amounts. Because they are meant to address unfair trade practices and unforeseen shifts in trading arrangements that are harmful to companies that deal with importation, they are known as remedies.

These processes were already included in American and other ally nations' legal systems when the GATT was initially formed, which is mainly why they are now members of the GATT. Since the enforcement of these regulations would obviously contradict the fundamental nondiscrimination rules of the GATT, exclusions were added in the initial terms and are still in place today. Over time, as other nations have joined the GATT/WTO, they have indeed enacted the same rules since the contract permits them. This regulatory form, which was created in the United States and other wealthy nations about a century earlier, has now spread to the majority of other nations and has evolved into a fundamental way of changing trade policy from the pledges made in earlier GATT sessions.

Trade remedy legislation is the primary legal tool available to WTO members today for increasing domestic levels of industry protection. The GATT and WTO treaties take away nations' sovereignty and independence with regard to increased trade barriers by compelling them to the highest levels of protection. Keep in mind that nations may always remove import tariffs independently if they want without breaking agreements. Trade remedy rules provide a safety valve since, under certain conditions, nations may effectively break their commitments.

National Treatment

When imported items have passed customs and are being treated equally with locally manufactured items that are similar to or almost interchangeable with them, this is referred to as national treatment. As a result, it is permitted to discriminate by imposing a tax on imported products that are not imposed on domestic goods, but after the product has moved through customs, it should be treated equally. Therefore, this requirement is applicable to both municipal and state taxes as well as laws with regard, for example, to health and safety regulations. For instance, national treatment mandates that the same taxation is applied equally to both local and imported cigarettes when a state or local government imposes a tax on cigarettes.

If lead is to be managed, then all toys must be considered equally; otherwise, a government could not allow lead-painted imported toys to be marketed but not local toys.

Tariffs Preferred

According to the national treatment concept, only border actions should be used to defend local product suppliers. Another collection of GATT regulations has as its common goal the restriction of even border security to a single point of import tariffs. General forbids quantitative limits on imports and exports. However, a range of clauses in this and other articles specify exceptions to this main agreement. (Two such exceptions are impacted by the Uruguay Round treaties on balance-of-payments policies and protections.) Additional Uruguay Round agreements expertly control additional types of protection (mainly in the form of taxes) that are allowed if local companies are attacked by imported products that are subsidized or discarded (GATT 1947 Article VI).

The fundamental goal of keeping import taxes as the only type of trade restriction has been preserved under the GATT 1994; in fact, it has been significantly strengthened in the extremely significant import and export of agricultural commodities.


The idea of transparency was also carried through to GATT in 1994. Transparency and international examination are important Worlds Trade Organisation principles (i.e., in the agreement Establishing the WTO). Additionally, it is preserved in more detailed provisions integrated into many additional Uruguay Round accords as well as in general criteria imposed by GATT Article X for trading policies and laws impacting trade-in products. These crucial components established how the former GATT system operated and are still present in the GATT of 1994. Since the GATT's implementation, a large number of studies on these rules have been conducted and evaluated at various levels of involvement and complexity.


The GATT is a legal arrangement for trade deals. In contrast to the agreement, it adopts a distinct set of economic principles. Another international pact is the GATT. The regulatory framework it provides, however, is different from the framework created by the other foreign agreements of the community.

The GATT's stated goal of defending individual rights is likewise far from obvious. The agreement appears to have been created primarily to regulate commercial interactions between sovereign entities. Therefore, it's possible that the GATT shouldn't be subject to the same definition of "direct effect" as the Treaty and other international accords. After all, it is still possible to uphold domestically applicable GATT legislation and individual rights without providing the accord's immediate effect before a WTO decision.

However, it is also true that people will finally feel the impact of the GATT. GATT members have committed to the GATT's detailed and specific commitments. The GATT also developed a procedure for resolving disputes between contractual parties according to established rules. Therefore, there is justification for assuming that when the WTO determines the community's responsibilities under the GATT, individuals should be allowed to assert their rights under the GATT.

Ultimately, it is up to the reader to judge whether or not the direct impact of GATT is acceptable. Specifically, should the European Court of Justice allow the direct effect on the GATT because no other nation has done so, or should it refuse direct impact because doing so would invalidate the Community's GATT privileges.

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