What Is General Agreement On Trade

The summit almost resulted in a third organization. This should be the very ambitious International Trade Organization (ITO). The 50 countries that started negotiations wanted an agency within the United Nations to create rules, not only for trade, but also for jobs, agreements on raw materials, trade practices, foreign direct investment and services. The ITO charter was adopted in March 1948, but the U.S. Congress and a few other countries refused to ratify it. In 1950, the Truman administration declared defeat and completed the ITO. The General Agreement on Tariffs and Trade (GATT) was the first multilateral free trade agreement. It first came into force in 1948 as an agreement between 23 countries and remained in force until 1995, when it joined 128 countries. It has been replaced by the World Trade Organization.

While services currently account for more than two-thirds of world output and employment, they account for no more than 25% of total trade, as measured by the balance of payments. But this apparently modest proportion should not be underestimated. Indeed, the balance of payments statistics do not cover one of the types of services defined in the GATS, i.e. the supply by commercial presence in another country (mode 3). Although services are increasingly being exchanged in their own legislation, they also serve as essential inputs for the production of goods and, therefore, services, when value-added, account for about 50% of world trade. The GATS agreement covers four types of service delivery in cross-border trade:[3] GATT was created to create rules to end or limit the most costly and undesirable features of pre-war, namely quantitative barriers to trade, such as trade control and quotas. The agreement also provided for a system for resolving trade disputes between nations and the framework allowed for a series of multilateral negotiations on the removal of customs barriers. The GATT was considered a major success in the post-war years.

The existence of specific commitments entails other obligations relating, among other things, to the notification of new measures having a significant impact on trade and the prevention of restrictions on international payments and transfers. The sixth round of GATT multilateral trade negotiations, which took place from 1964 to 1967. It was named after U.S. President John F. Kennedy in recognition of his support for the reformulation of the U.S. trade agenda, which culminated in the Trade Expansion Act in 1962. This legislation has given the president the greatest bargaining power of all time.

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