General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) is the second of three regimes governing international trade in the modern era. It has been succeeded by the World Trade Organization (WTO), and coexisted with the abortive International Trade Organization (ITO).

The International Trade Organization was intended to be a counterpart to the International Monetary Fund and the World Bank, institutions negotiated at the Bretton Woods Conference in 1944. Named for Bretton Woods, New Hampshire, site of the Mount Washington Hotel where negotiations took place, the conference—formally called the United Nations Monetary and Financial Conference, but rarely recognized by that name anymore—was attended by 730 [Page 738]delegates of the 44 Allied nations, already planning for the shape the world would take when World War II ended. The foundational idea of Bretton Woods was the encouraging of open markets and the lowering of barriers to trade, among member nations.

In 1946 the United Nations Economic and Social Committee called for a conference to charter the International Trade Organization. Though agreed upon fairly quickly, ITO never got off the ground; every attempt to have the United States Congress approve it failed, on the grounds that the ITO would be given too much jurisdiction over internal American matters. At the end of 1950, President Truman announced that he would stop seeking ratification of the ITO charter, and without American involvement, the organization withered on the vine.

GATT, in the meantime, had successfully been implemented but had been intended to supplement, rather than replace, the ITO. While the ITO, and the WTO that now reigns, was an organization, GATT was only a treaty, with no infrastructure, staff, or institutional existence. Negotiations over the GATT began in parallel and in cooperation with the ITO negotiations, and were originally intended to be a short-term treaty binding countries to some easily agreed-upon terms until the ITO began operations.

Twenty-three countries signed the original treaty, which in the United States was considered a congressional-executive agreement, an exercise of the president's power to negotiate trade agreements when granted such authority by Congress. In essence, it granted “most favored nation” status upon all nations signing the treaty.

A staggering total of 45,000 tariff concessions were made by the first signing of GATT, affecting half of the world's trade—an enormous initiative, despite the failure of the ITO three years later. More “rounds” of GATT followed, each addressing slightly different issues, participated in by slightly different assortments of countries:

• The Annecy Round in Annecy, France, in 1949, further reduced tariffs among 13 countries.
• The Torquay Round, 1951, England, another 8700 tariff concessions.
• The Geneva Round, 1956, further tariff concessions as well as the first participation of postwar Japan.
• The Dillon Round, 1962, Geneva, named for Secretary of the Treasury Douglas Dillon, tariff concessions and early talks about the European Economic Community.
• The Kennedy Round, 1967, Geneva, named for the late President Kennedy, involving 66 countries, the most to date.
• The Tokyo Round, 1979, 102 countries, and the first discussion of limiting non-tariff barriers and voluntary export restrictions.
• The 1993 Uruguay Round, begun in 1986, was the most ambitious. It took seven years to negotiate, involved 123 countries, and was the first to involve agricultural goods. This was the final round of GATT, as one of the reasons for negotiations lasting so long was the decision to finally create an organizational body: the WTO, which replaced GATT in 1995.

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