General Agreement on Tariffs and Trade (GATT)

Definition:
A multilateral trade agreement, negotiated at Geneva in 1947 and operational since January 1948. It both sets out the rules of conduct for international trade relations and provides a forum for multilateral negotiations. The objective of GATT is to liberalize world trade through the key commercial principles of non-discrimination, reciprocity, and the gradual elimination of tariffs and other barriers to trade. With the exception of customs unions and free trade areas, all contracting parties are generally bound by the MOST FAVOURED NATION clause. GATT also provides a framework for the settlement of grievances of members who believe that other members have violated the agreement. Tariff reductions as a result of seven major trade negotiations conducted under the auspices of GATT have been significant. The Kennedy Round of negotiations held in Geneva 1964-7 marked the first time tariff reductions were negotiated on whole groups of goods rather than individual items. The Tokyo Round (1973-9) addressed the problem of non-tariff as well as tariff barriers. GATT has also given some attention to trade problems of DEVELOPING COUNTRIES. In 1964 it established an International Trade Centre (operated jointly with UNCTAS since 1968) to provide information on export markets and assistance with the formulation and administration of export promotion programmes. In 1965 the General Agreement was amended to include a section on Trade and Development. This permits developing countries to trade with DEVELOPED COUNTRIES on a non-reciprocal basis and allows a system of generalized trade preferences by developed for developing countries, thereby waiving the Most Favoured Nation clause.

Cross-References:
[developing countries] [developed countries] [Most Favoured Nation]

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