The document discusses the General Agreement on Tariffs and Trade (GATT). It summarizes that GATT was created in 1947 as an outcome of failed negotiations to establish the International Trade Organization. Its objective was to reduce barriers to international trade through lowering tariffs, quotas, and subsidies. GATT provided a forum for negotiations between member states to encourage free trade. It was transformed into the World Trade Organization in 1995.

1. Presented by,
Nambi R
Masters of Business Administration
SRM UNIVERSITY
2016-18

2. GATT
 Out come of the failure of negotiating governments to
Create the international trade organisation(ITO)
 Negotiated during the UN conference on Trade and
Employment
 Formed in 1947 and Transformed to world Trade
Organisation(WTO)1995

3. Objective
 Reduction of Barriers to international trade.
 Achieved through reduction of tariff barriers,
quantitative restrictions and subsidies on trade
through a series of agreements.
 It wa a treaty, not an organisation.

4. GATT

5.  The General Agreement Tariffs and Trade (GATT) was first
signed in 1947.
 Was designed
 To provide an international Forum
 That encouraged free trade between member
states.
 By regulating and reducing tariffs on traded
goods
 Providing a common mechanism for resolving trade
disputes.

6. GATT??
A Treaty, not an organisation
 Was the out come of failure of negotiating governments
to creat the ITO.
 The Bretton Woods Conference introduced the idea for
an organisation to regulate the trade as part of a larger
plan for economic recovery after world war II.
 As government negotiated states began parellel
negotiations for the GATT as a way to attain early tarrif
reductions.
 Once the ITO failed in 1950 the only GATT agreement was
left.

7. Objective
 Reduction of Barriers to International Trade
 This was achieved through the Reduction of
 Tarrif barriers
 Quantitative Restrictions
 Subsidies on trade through a series of agreements

8. History
 Divided into 3 phases:
 First:
 From 1947 until the Torquay Round
 Largely concerned which commodities would be covered bythe
agreement
 Freezing existing tariff levels
 Second:
 From 1959 to 1979
 Focused on reducing tariffs
 Third:
 Consists only of the Uruguay Round from 1986 to 1994
 It extended the agreement to new areas such as intellectualproperty,
services, capital, and agriculture
 Final outcome was creation of WTO

9. History Contd..
 GATT signatories occasionally negotiated new
tradeagreements that all countries would enter into
 Each set of agreements was called a round
 In general, each agreement bound members toreduce
certain tariffs. Usually this would includemany special-
case treatments of individual products,with exceptions or
modifications for each country.

10. Trade Barriers
Tariff and Non-Tariff Barriers
 While free-trade maximizes world welfare, most nations
impose some trade restrictions that benefit special groups in
the nation. The most important type of trade restriction
historically is the tariff.
 This is a tax or duty on the imports or exports.
 When a small nation imposes an import tariff, the domestic
price of the importable commodity rises by the full amount of
the tariff for individuals in nation. As a result, domestic
production of the importable commodity expands while
domestic consumption and imports fall. However, the nation
as a whole faces the unchanged world price since the nation
itself collects the tariff.

11. Tariffs
 Tariffs can be ad-Valorem, specific, or compound.
 Ad-Valorem tariff is expressed as a fixed percentage ofthe
value of the traded commodity.
 Specific tariff is expressed as a fixed sum per physicalunit
of the traded commodity.
 A compound tariff is a combination of an Ad Valoremand
a specific tariff.

12. Trade Barriers
 An import tariff is a duty on the imported commodity,
while an export tariff is a duty on the exported
commodity.
 Export tariffs are prohibited by the U.S. Constitution but
are often applied by developing countries on their
traditional exports (such as Ghana on it’s cocoa and Brazil
on it’s coffee) to get better prices and revenues.
 Developing nations rely heavy on export tariff to raise
revenues because of their ease of collection.

13. Non-Tariff Barrier
 International trade also hampered by numerous
Technical, administrative, and other regulations.
 These include safety regulations for automobile and
electrical equipment, health regulations for the hygienic
 Production and packaging of imported food products, and
labeling requirements showing origin and contents.

14. Non-Tariff Barrier(Subsidies)
 National government sometimes grant subsidies to
domestic producers to help improve their trade
position. Such devices are indirect form of protection
provided to domestic businesses, whether they may be
import competing producers or exporters.
 Two types of subsidies can be distinguished: a
domestic subsidy , which is sometimes granted to
producers of import-competing goods, and an export
subsidy, which goes to producers of goods that are to
be sold overseas.

15. Success of GATT
 Huge increases in world trade
 New members: 23 to 110
 Enormous reductions in tariffs