4. INTRODUCTION
• The General Agreement on Tariffs and
Trade was a free trade agreement between 23
countries that eliminated tariffs and
increased international trade.
• It was the first worldwide multilateral free trade
agreement.
• Signed-30/october/1947,location-geneva
• Formed in 1947 and transformed to World
Trade Organization (WTO) in 1995
5. ORIGIN
It was first discussed during the united nations
conference on trade and employment and was the
outcome of the failure of negotiating governments to
create the international trade organization(ITO).
It was not translated into practice due to various
difficulties and lack of common agreements.
The participants were anxious to begin the process of
trade liberalization as soon as possible.
The result was incorporated general agreements in
1947.
6. GATT'S MAIN OBJECTIVE
• The purpose of GATT was to eliminate
harmful trade protectionism.
• Expansion of international trade
• Increase of world production by ensuring
full employment in the participating nation.
• Development and full utilization of
resources
• Promote international trade and raising
standard of living of the world.
7. THREE PROVISIONS
GATT had three main provisions.
1.The’ most favored nation’ clause
2. GATT prohibited restriction on the number
of imports and exports. (quantitative restriction).
3.Tariff negotiation and tariff reduction
8. MEMBER COUNTRIES
• The original 23 GATT members were Australia;
Belgium; Brazil; Burma, now called Myanmar; Canada;
Ceylon, now Sri Lanka; Chile; China; Cuba; Czechoslovakia,
now Czech Republic and Slovakia; France; India; Lebanon;
Luxembourg; Netherlands; New Zealand; Norway; Pakistan;
Southern Rhodesia, now Zimbabwe; Syria; South Africa; the
United Kingdom and the United States. The membership
increased to more than 100 countries by 1993.
10. Continual reductions in tariffs helped very high
rates of world trade growth during the 1950s
and 1960s — around 8% a year on average
Trade growth consistently out-paced
production growth
The rush of new members during the Uruguay
Round demonstrated recognition of multilateral
trading system as the anchor for development
and an instrument of economic and trade
reform.
11. BUT……
• GATT’s success in reducing tariffs to a low level, with a
series of economic recessions 1970-80’s drove governments
to devise other forms of protection for sectors facing
increased foreign competition
• High rates of unemployment and constant factor closures
led governments in Western Europe and North America to
seek bilateral market-sharing arrangements with competitors
and to embark on a subsidies race to maintain their holds on
agricultural trade
• Both these changes undermined GATT’s credibility and
effectiveness.
• The problem was not just a deteriorating trade policy
environment.
12. • By the early 1980s the General Agreement was
clearly no longer as relevant to the realities of
world trade as it had been in the 1940s
• World trade had become far more complex and
important than 40 years before
• The globalization of the world economy was
underway
• Trade in services — not covered by GATT rules
• Ever increasing international investments
13. • Factors convinced GATT members that a
new effort to reinforce and extend the
multilateral system should be attempted.
• That effort resulted in the Uruguay
Round, the Marrakesh Declaration, and
the creation of the WTO.
15. WORLD TRADE ORGANIZATION
• Location :- Geneva, Switzerland
• Established: 1 January 1995
• Created by : Uruguay Round negotiations (1986-
94)
• Membership :153 countries (on 23 July 2008)
• Budget : 185 million Swiss francs for 2008
• 2007 Secretariat Staff : 625
• Head : Director-General, Pascal Lamy
16. OBJECTIVE
• The Raising standard of living and income
• reiterates the objectives of GATT
• Introduce sustainable development
• Taking positive steps to ensure that developing
countries
17. FUNCTION OF WTO
• provide the framework for the implementation,
administration and operation of the multilateral Trade
Agreements.
• The WTO shall provide the forum for negotiations among
its members concerning their multilateral trade relations in
matters dealt with under the Agreement in the Annexes to
this Agreement.
• The WTO shall administer the Understanding on Rules and
Procedures Governing the Settlement of Disputes.
• The WTO shall administer Trade Policy Review Mechanism.
21. Five principles are of particular importance in understanding
both the pre-1994 GATT and the WTO:
1.NON-DISCRIMINATION.
2.RECIPROCITY.
3.BINDING AND ENFORCEABLE COMMITMENTS.
4.TRANSPARENCY.
5.SAFETY VALUES
22. PROVISIONS
There are three types of provision in this direction:
1.articles allowing for the use of trade measures to attain
non-economic objectives;
2.articles aimed at ensuring "fair competition"; members
must not use environmental protection measures as a
means of disguising protectionist policies.
3.provisions permitting intervention in trade for
economic reasons.
23. GATT VS WTO
GATT
• It is a set of rules and
multilateral agreements.
• It is designed with an
attempt to establish
international trade org.
• It had contracting parties.
• It has no provisions for
creating an organization
• Gatt is adhoc and
provisional.
WTO
• It is a permanent
institution.
• It is established to serve
its own purpose.
• It has members.
• Has legal basis bcz
member nation have
verified the WTO
agreement.
• WTO commitments are
full and permanent.
24. CONCLUSION
Decision-making
• The WTO describes itself as "a rules-based, member-driven
organization—all decisions are made by the member
governments, and the rules are the outcome of negotiations
among members".
• The WTO Agreement foresees votes where consensus
cannot be reached, but the practice of consensus dominates
the process of decision-making.
