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General Agreement on Tariffs and Trade
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INTRODUCTION
GATT is the short form for General Agreement on
Trade and Tariffs. It was Multilateral Agreement
signed by 23 nations which laydown certain rules for
conducting International Trade. It was established on
1st January 1948 .At this time it was considered as
interim agreement to fill the gap of International
Trade Organization(ITO).
GATT was transformed into a WTO with effect from
January 1995 .
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OBJECTIVES
Its important objectives
1. Raising standard of living.
2. Ensuring full employment and a large and a steadilygrowing volume of real income and effective demand
3. Developing full use of the resources of the world.
4. Expansion of production and international trade.
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Basic Principles of GATT:
1. The Most Favored Nation(MFN) clause:
It implies that any reduction in the import duties of a GATT
member must be applied simultaneously and unconditionally to imports
from all other GATT countries. It applies similarly to duties on exports. This
rule basically requires non-discrimination in trade policies.
2. The use of tariffs :
Although GATT does not specially encourage protection through tariff it
does permit the protection of domestic industries through import tariff.
The GATT contains a clause which stabilizes the tariff of member
countries so as to prevent disturbance of trade flows by frequent
change in import duties.
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3. Tariff bargaining :
The principal supplier of a certain product should ask importing countriesto reduce tariffs on that product. In return, those countries would expect
counter offers, and negotiations would continue till satisfactory
agreement was reached.
The Kennedy Round negotiations witnessed the use of new technique
linear bargaining.
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4. Consultation:
A basic principle of GATT is that member-countries should consult one
another on trade matters and problems.
They can call on GATT for a fair settlement of cases in which they feel that
their rights under the GATT are being withheld or compromised by other
members.
5. Quantitative restrictions:
Quantitative restriction on trade, such as imports quotas and importlicensing, are strictly forbidden by the GATT unless when they become
necessary to reinforce domestic output restriction measures in agriculture and
fisheries or to apply standards and other technical regulations.
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FUNCTIONS OF GATT:
NEGOTIATIONS UNDER GATT
SAFEGUARDS
TRADE NEGOTIATIONS AMONG DEVELOPING COUNTRIES
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THE URUGUAY ROUND:
Uruguay round is the name which the eight and the latest round of the
multilateral trade negations (MTN) held under the auspices of GATT is
popularly known as UR because it was launched in Uruguay in September
1986.
It access for NAMA Products in the developed country
Discussion taken place in following areas
Trade in services
TRIPS
TRIMS
Following the UR agreement GATT was converted from a provisional
agreement into a formal international organization called WTO with
effect from Jan 1 1995
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GATT AND WTO:
Following the UR Agreement, GATT was converted from a provisional
agreement into a formal international organization called World Trade
Organization with the effect from January 1 1995. WTO now serves as a single
institutional frame work encompassing GATT and all the results of the Uruguay
Round.
The old GATT system allowed under what was known as the grandfather
of clause, existing domestic legislation to continue even if it violated a GATT
agreement that a member country had accepted by be in a signatory to GATT.
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DIFFERENCE BETWEEN GATT AND WTODIFFERENCE BETWEEN GATT AND WTO
GATT was adhoc and
provisional.
GATT had contracting parties.
GATT system allowed existingdomestic legislation to
continue even if it violated a
GATT agreement.
GATT was less powerful,
dispute settlement system
was slow and less efficient, its
ruling could be easily block
WTO and its agreements are
permanent.
WTO has members.
WTO does not permit this.
WTO is more powerful than
GATT, dispute settlement
mechanism is faster and more
efficient, very difficult to block the
rulings.
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CONCLUSION
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