Short Essay on the Origin of GATT

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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 healthy 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 made with the miscellaneous and general objective of augmenting and maintaining world trade and employment. Though, the Havana Charter for ITO was designed as a sort of international trade constitution, it was not translated into practice due to various difficulties and 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.

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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 related international matters.

It serves as an important international forum for carrying on negotiations on 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.

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