GATT

General Agreement on Tariffs and Trade (GATT)

The first General Agreement on Tariffs and Trade (GATT) was negotiated in 1947 between 18 countries. A series of ad hoc secret negotiating rounds followed, designed to foster free trade—that is, the removal of trade barriers such as tariffs and export bans—through setting rules for international trade and settling trade disputes. GATT became ‘both a set of rules and a negotiating forum.’ Proponents argued that if trade was unimpeded by trade barriers and tariffs, global economic growth would be accelerated and each country would prosper as a result.

Since 1947 there have been eight rounds of negotiations to update the GATT rules. The last round—the Uruguay round—began in 1986 in Uruguay with 108 countries represented. Prior to the Uruguay Round, tariffs had been reduced by 75 percent. Business leaders hoped that the Uruguay Round would achieve further significant reductions and also address non-tariff barriers to trade. Although the Uruguay Round was due to end in 1990, it foundered over a lack of agreement about reductions in protection for agriculture, particularly in Europe, and also conflict over US efforts to extend the agreement to cover services (see next chapter). Business from both sides of the Atlantic lobbied hard.

The Uruguay Round was completed in 1993, with the formation of the World Trade Organisation (WTO) as its main outcome.