General Agreement on Tariffs and Trade (GATT)
Candlefocus EditorThe basis of GATT was the liberalization of global trade. Countries negotiated to lower tariffs and other barriers to free up global trade. This was beneficial to all, as it enabled countries to expand and capitalize on their comparative advantages while still protecting their economies from unfair competition. These negotiations created a permanent forum for the resolution of disputes and the development of global trading rules and conventions.
In its first eight rounds, the GATT was notably successful in reducing regional tariffs and other trade-distorting policies. For example, in the 8th round in Brussels in 1990, the average tariff rate dropped from 40% to just 4%. This allowed countries to significantly increase the volume of international trade and generated economic growth across all participating countries.
Moreover, the GATT, through its dispute resolution mechanisms, also developed and codified international trade law. This law helps to ensure that countries abide by the rules, promoting a fair and transparent trading system.
All in all, the GATT was a critical component of post-war agreements that enabled countries to achieve sustained economic growth. It enabled countries to boost the volume of international trade, capitalize on comparative advantages, and develop international trade law. This was a major factor in the growth of the global economy in the decades following the end of WWII. The success of the GATT ensured that it was taken up in the negotiations of the WTO, which it has underwritten to this day.