GATT Stands for General Agreement on Tariffs and Trade.

It is a multinational treaty among the member countries that lays down certain agreed rules for conducting international trade. GATT came into being from 1 stJanuary 1948. At the time of its formation, it was considered to be an interim arrangement pending the formation of U.N. agency to supersede it. When such agency failed to emerge, GATT was amplified and further enlarged at several succeeding negotiations. As on 30th April 1983, 89 countries of the world were members of this organization. In addition, one country has acceded provisionally and 29 countries follow its rules in their foreign trade. The member countries contribute together to four fifth of the total world trade. It is interesting to note that underdeveloped countries form a sizable majority in GATT. The basic aim of GATT is to liberalize the world trade through negotiations among member countries and for the last 37 years, it has been concerned with negotiating the reduction or even elimination o trade barriers-tariffs and nor-tariffs between countries and improving trade relations so that the international trade may flow freely and swiftly. In its effort to achieve this aim, GATT oversees the application o its rules continuously. It also provides a forum to its member countries to discuss their trade problems and negotiate to enlarge their trading opportunities. The rapid and interrupted growth in the volume of international till 1980 provides a good testimony for the success of GATT. Basic Principles of the GATT: The GATT deals with a wide range of commercial policies. It has framed certain rules to facilitate the growth of trade among member countries. These rules follow the under mentioned principles. 1. Trade without discrimination: GATT rules specify non-discriminating trade policy. A country granting an advantage to one non GATT party must grant the same advantage to other member countries in the application and administration of import and export duties and changes. This means that each country shall accord to any other member country the benefits of the customs duties and tariff on the goods imported from it. Exceptions to these basic rules are allowed only in case of regional trading arrangements and the developing nations. 2. Protections trough tariffs: Protection to home industries can be provided only through customs tariffs and not through any to make the extent of protection clear and to make competition possible. Exception is, however, provided in case of developing nations where developmental needs require more imports. The country may impose quantitative on their foreign exchange resources. 3. A Stable Basis of Trade: A stable and predictable basis for trade is provided under rules. The contracting countries are bound to obey the levels of tariffs negotiated between the members. Binding of tariffs means that these can not be
For other Finance, Accounts, Marketing & HR &OB topics, Notes & Projects Visit:

WWW.MANAGEMENTDUNIYA.COM

increased unilaterally by any country. However provision for re negotiation has been made by which the bound tariffs can be increased. However, this practice is discouraged by providing the compensation for the increase to the effected parties. 4. Consultation: A basic principle of GATT is that member countries should consult one another in the matter of trade and trade problems. They can call on GATT for settlement in cases where member countries feel that their rights under the GATT have been encroached or withheld or compromised by another member of the GATT. The GATT council has set up panels of independent experts to examine the trade disputes between member states. The members on the panel are chosen among countries which have no direct interest in the disputes being investigated. The panel is generally interested in making mutual and amicable settlement between the two parties. The GATT is making increasing use of these panels.

For other Finance, Accounts, Marketing & HR &OB topics, Notes & Projects Visit:

WWW.MANAGEMENTDUNIYA.COM