The General Agreement on Tariffs and Trade (GATT) was established in 1947 as an international agreement aimed at promoting free trade among member countries. The agreement set out principles for international trade that have since guided global trade policy.
Under the GATT, member countries agreed to reduce trade barriers such as tariffs and quotas, with the ultimate goal of eliminating them altogether. This was done in order to create a level playing field for international trade and to promote economic growth and development around the world.
One of the key principles of the GATT was the most favored nation (MFN) rule. This rule states that any tariff reductions or trade concessions offered to one member country must be extended to all other member countries. This ensured that no member country would be disadvantaged in trade negotiations and that trade would be conducted on a fair and equal basis.
Another key principle of the GATT was the national treatment rule. This rule requires that imported goods be treated no less favorably than domestically produced goods. This helped to prevent discrimination against imported goods and ensured that trade was conducted in a fair and equitable manner.
The GATT also established a dispute settlement mechanism to handle disputes between member countries. This mechanism has since been replaced by the World Trade Organization (WTO), but the basic principles remain the same. The goal of the dispute settlement mechanism is to resolve trade disputes in a peaceful and cooperative manner, rather than through retaliation or other measures that could harm the overall trading system.
Overall, the GATT and its principles have played a significant role in promoting international trade and economic growth around the world. They have helped to reduce trade barriers and promote fair and equal trade between member countries. While the GATT has since been replaced by the WTO, its principles continue to guide global trade policy and ensure a level playing field for international trade.