Legal Definitions - GATT

The General Agreement on Tariffs and Trade (GATT) is an agreement between many countries to reduce barriers to trade. It was created after World War II to help rebuild economies and counterbalance the harmful effects of high tariffs. GATT successfully reduced average tariffs among member countries from over 20% to around 5% or less.

For example, before GATT, many countries had tariffs of over 40% during the 1930s. But with GATT, member states agreed to apply tariffs in a non-discriminate way, meaning they should apply to all member states equally with limited exceptions. GATT also limited the ability of countries to place higher restrictions on goods from other member states than within their own country. This helped to reduce friction for international trade and allowed for more beneficial global trade among member states.

While GATT was meant as a multilateral treaty, it effectively became its own organization for managing trade issues among members due to the failed International Trade Organization (ITO). After many more rounds of negotiations, GATT evolved into the World Trade Organization (WTO), which became the new forum for enforcing and changing provisions of the GATT.

Overall, GATT was an important agreement that helped to reduce barriers to trade and promote economic growth among member states.