Ana E.

Valeriano

20138057
International Trade
Homework No.1

The General Agreements on Tariffs and Trade, known as the GATT, is one third of the
Bretton Woods system that was created after World War II to ensure a stable trade and economic
world environment. For several decades, the General Agreement on Tariffs and Trade was
applied on a provisional basis. It was a multilateral agreement containing rules relating to trade
in goods, and although it operated like a permanent agreement, it was without a permanent
institutional framework, and was serviced by an ad hoc Secretariat. The weakness of GATT is
that its benefits have mainly gone to the industrialized countries. Under GATT, Most negotiations
and tariff reductions have taken place in respect of manufactured goods. So the trade gap for the
developing countries has become more unfavorable. A search for a new institutional
arrangement, especially one which one would tackle the problems of the global trade of
developing countries, led to the formation of United Nations Committee on Trade and
Development in 1946
World Trade Organization (WTO) on the other hand was formed as a replacement for
GATT in 1995 with the purpose of supervising and liberalizing international trade. The
organization deals with regulation of trade between participating countries, it also provides a
framework for negotiations and formalizations of trade agreements. It is also responsible for
enforcing trade laws, agreements and resolving disputes. The WTO was created with the purpose
of being a stronger and having a more permanent framework compared to the previous GATT. It
also monitors trade in services and trade-related aspects of intellectual property rights, in
addition to trade in goods. The WTO has a total of 157 member countries.
Though there are a few similarities between the GATT and the WTO, they are distinctly
different from each other.
(a) The GATT was a set of rules, a multilateral agreement with no institutional foundation
with only a small associated secretariat. The WTO is permanent institution with its own
secretariat.

(b) The GATT was applied on a "Provisional basis" even if, after more than 40years,
governments chose to treat it as a permanent commitment. The WTO commitments are
full and permanent.
(c) The GATT rules applied to trade in merchandise goods. In addition to goods, the WTO
covers trade in services and trade related aspects of intellectual property.
(d) While GATT was multilateral instrument by the 1980s many new agreements had been
added of plurilateral, and therefore selective, nature. The agreements which constitute the
WTO are almost all multilateral and thus involve commitments for the entire
membership.(v)The WTO dispute settlement system is faster, more automatic and thus
much less susceptible to blockages than the old GATT system.(vi)The WTO is more
global in its membership than the GATT.

GATT
Full form

General Agreement on Tariffs and

1948

Purpose

To strengthen international trade.

Scope

Dispute resolution

World Trade Organization

Trade

Year of creation

Framework

WTO

No permanent structure or

1995
To govern GATT and international
trade practices.
Has a permanent structure with a

framework.

permanent framework.
Trade in goods; trade in services and

Trade in goods.

trade-related aspects of intellectual

Has a permanent appellate body to

review findings and settle disputes.

property rights.
Disputes are resolved faster as
settlement system has a select time
frame.

References:
http://www.differencebetween.info/difference-between-gatt-and-wto
http://tradeinservices.mofcom.gov.cn/en/h/2007-10-23/7295.shtml
http://www.law.georgetown.edu/library/research/guides/FromtheGATTtotheWTO.cfm