The General Agreement on Tariffs and Trade, or GATT, is an international agreement that was created in 1947 to promote free trade and reduce trade barriers between countries. It was formed in the aftermath of World War II, with the aim of helping to rebuild the world economy and prevent future conflicts.
The GATT was signed by 23 countries, including the United States, Canada, and much of Western Europe. Over time, the agreement expanded to include a total of 164 countries, making it one of the most widely accepted and influential international trade agreements.
One of the key principles of the GATT is the concept of most-favored-nation (MFN) treatment. This means that countries cannot grant preferential treatment to one trading partner over another. If a country reduces tariffs or trade barriers for one partner, it must do so for all partners. This helps to ensure a level playing field for all countries and promotes fair competition.
Another important principle of the GATT is the reduction of tariffs. Tariffs are taxes on imported goods, and they can make goods more expensive for consumers and businesses. The GATT aims to reduce or eliminate tariffs between countries, which can help to lower prices for consumers and increase trade between countries.
The GATT also sets rules for trade in goods and services, including intellectual property rights and dispute settlement mechanisms. These rules help to ensure that trade is conducted fairly and disputes are resolved in a timely and effective manner.
In 1995, the GATT was replaced by the World Trade Organization (WTO), which expanded on the principles and rules set out in the original agreement. The WTO remains a key international organization for promoting free trade and reducing barriers between countries.
Overall, the General Agreement on Tariffs and Trade has played a significant role in promoting international trade and economic growth since its creation in 1947. Its principles and rules have helped to create a more open and fair global trading system, and it continues to be an important influence on international trade today.