General Agreement on Tariffs and Trade (GATT) is a multilateral treaty created to promote trade in manufactured and agricultural goods among the countries that signed it. GATT rules work to lessen import quotas and other trade restrictions. The 23 founding countries of the GATT signed the treaty in 1947. Many other countries signed the treaty in the following decades.
The principles of nondiscrimination and transparency are central to the GATT. Nondiscrimination is reflected in the ‘’most-favored-nation’’ clause. This clause states that a GATT country granting a trade advantage to one country must grant it to all countries that have signed the treaty. Transparency means that trade measures should be made known to other GATT countries, preferably in the form of a tariff, which is highly visible.
The GATT was created to be an interim measure until a United Nations agency on trade—the International Trade Organization (ITO)—could be formed. When the charter for the ITO was completed in 1948, however, some nations, including the United States, refused to ratify it. Thus, from 1947 until 1995, the GATT was both a treaty and an organization for regulating trade.
Important trade meetings were held by the GATT nations. A series of such meetings was called a round. The first round, which established the GATT, was held in Geneva in 1947. Other rounds have included the Annecy Round (1949), the Torquay Round (1951), the Kennedy Round (1964-1967), and the Tokyo Round (1973-1979).
In 1994, GATT officials completed the Uruguay Round, a series of negotiations that began in Uruguay in 1986. The negotiations resulted in an agreement that called for setting up the World Trade Organization (WTO). When the agreement went into effect in 1995, the WTO was founded. The WTO administers the GATT and reduces trade barriers in services and in other areas not covered by the treaty.
