Origin of Gatt

Inspired by the success of agreement for international monetary co-operation as reflected in the formation of the IMF, similar cooperation in international trade also was desired by many trading nations for expansion of world trade. It was thought that for healthily world trade. Attempt must be made to relax the existing trade restrictions, such as tariff. As such at the international conference on trade and employment held in 1946 at Havana a proposal for establishing an agency called the international trade organisation (ITO) was mad with the miscellaneous and general objective of augmenting and maintaining world trade and employment. Though the Havana charter for into was designed as a sort of international trade constitution, it was not translated into practice due to various difficulties nd lack of common agreement.

However some of the countries took up one of the important issues of the Havana charter regarding relaxation of trade restrictions by incorporating it into a general agreement on tariffs and trade (GATT). This was signed in 1947 by some twenty three major trading nations, including India. GATT membership has now gone up to more than 64. As the name itself suggests the general agreement was concerned only with tariffs and trade restrictions and reacted international matters. It serves as an important international forum for carrying on negotiation son tariffs under GATT. Member nations meet at regular intervals to negotiate agreements to reduce quotas, tariffs and such other restrictions on international trade. GATT by its very nature is a contractual agreement among parties (or nations) it is a treaty that is collectively administered by the contracting nations. However it has become a permanent international trade and an institution for the multilateral expansion of trade.

Main objectives of GATT

By reducing tariff barriers and eliminating discrimination in international trade. The GATT aims at

1. Expansion of internaitol trade

2. Increase of world production by ensuring full employment in the participating nations.

3. Development and full utillsation of world resources; and

4. Rising standard of living of the world community as a whole.

However, the articles of the GATT do not provide directives for attaining these objectives. These are to be indirectly achieved by the GATT through the promotion of free (unrestricted) and multilateral international trade.

As such the rules adopted by GATT are based on the following fundamental principles.

1. Trade should be conducted in a one-discriminatory way;

2. The use of quantitative restrictions should be condemned and

3. Disagreements should be resolved through consultations.

In short members of GATT agree to reduce trade barriers and to eliminate discrimination in international trade so that multilateral and free trade may be promoted leading to wider dimensions of world trade and prosperity.

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