For the business professional navigating the international marketplace, understanding the General Agreement on Tariffs and Trade, or GATT, is an important part of the puzzle. GATT is a comprehensive treaty that governs international trade and tariffs between participating nations.
What Is GATT?
GATT came into effect on 1 January 1948 and is currently administered by the World Trade Organization. It provides a set of principles of conduct for global trading partners, with a focus on eliminating tariff and subsidy barriers that restrict the free flow of trade. Its most important provisions prohibit discrimination, require negotiations and seek to lower tariffs and other trade barriers.
What Does GATT Do?
One of the primary objectives of GATT is the liberalization of international trade. Specifically, it eliminates tariffs and subsidies between participating countries, increases the range of goods traded between countries, and establishes standardized rules governing international trade. This helps businesses to benefit from free and fair trade, and creates an even playing field for nations dealing in international relations.
How Does GATT Affect Businesses?
GATT helps businesses by reducing the barriers to international trade. It creates an environment that encourages competition, fair pricing and the free flow of goods and services across borders. By eliminating tariffs and artificial barriers, businesses can explore new markets and increase their ability to offer competitively priced products and services.
What’s Next for GATT?
GATT has created a strong foundation for future trade agreements. The World Trade Organization is currently pushing ahead with the next generation of trade agreements, which includes further liberalizing trade policies, modernizing dispute resolution mechanisms and reforming subsidy rules. As these future agreements come into effect, they will create new opportunities for businesses to access new international markets.
In sum, understanding the General Agreement on Tariffs and Trade is essential for businesses operating in the international marketplace. GATT has been successful in eliminating tariff and subsidy barriers that have traditionally restricted the free flow of trade, and is setting the stage for the next generation of international trade agreements.