WEST BENGAL STATE UNIVERSITY

KINGSTON LAW COLLEGE

TOPIC:
Internal Assessment

SUBJECT:
Historical
Development of
GATT, followed
by its Features

Submitted by :- Dr. Mainak Ghosal

Historical Development of GATT

The General Agreement on Tariffs and Trade (GATT) was established in 1947 as an
international trade organization aimed at promoting free trade by reducing tariffs and other
trade barriers. Its creation marked a significant milestone in the global effort to foster economic
cooperation and prevent the protectionist policies that contributed to the Great Depression and
World War II.
1. The Birth of GATT (1947)
The idea of creating an international trade organization was first conceived during the
negotiations of the Bretton Woods Conference in 1944. However, the initial proposal for an
International Trade Organization (ITO) faced opposition and was never ratified. As a result,
GATT was created as a temporary solution to address trade issues until a permanent
organization could be established.
On October 30, 1947, 23 countries signed the GATT in Geneva, Switzerland. The agreement
came into force on January 1, 1948. Its primary objective was to promote international trade
by reducing tariffs and other trade barriers through a series of multilateral trade negotiations
known as "rounds."
2. Early Rounds of Negotiations (1947-1967)
The early rounds of GATT negotiations focused primarily on tariff reductions. These rounds
included:

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 • Geneva Round (1947): The inaugural round resulted in 45,000 tariff concessions
affecting one-fifth of world trade.
• Annecy Round (1949): Participating countries made further tariff concessions.
• Torquay Round (1950-1951): This round led to additional tariff reductions.
• Geneva II Round (1956): Countries agreed to further tariff cuts.
• Dillon Round (1960-1961): This round addressed tariff reductions and introduced the
concept of compensatory trade agreements.
3. Kennedy Round (1964-1967)
The Kennedy Round was a significant milestone in GATT's history. It marked a shift from
simple tariff negotiations to addressing broader trade issues, including non-tariff barriers and
anti-dumping measures. The round resulted in an average tariff reduction of 35% and the
adoption of the Anti-Dumping Agreement, which aimed to prevent unfair trade practices.
4. Tokyo Round (1973-1979)
The Tokyo Round further expanded GATT's scope by addressing non-tariff barriers, such as
subsidies, countervailing duties, and technical standards. This round resulted in the adoption
of several new agreements, including the Subsidies and Countervailing Measures Agreement
and the Technical Barriers to Trade Agreement. These agreements aimed to create a more
transparent and fair trading system.
5. Uruguay Round (1986-1994)

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The Uruguay Round was the most ambitious and comprehensive round of GATT negotiations.
It addressed a wide range of issues, including:
• Agriculture: The round aimed to reduce agricultural subsidies and improve market
access for agricultural products.
• Services: The General Agreement on Trade in Services (GATS) was introduced to
liberalize trade in services.
• Intellectual Property: The Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) was established to protect intellectual property rights.
• Dispute Settlement: The Dispute Settlement Understanding (DSU) was created to
provide a more effective and binding mechanism for resolving trade disputes.
• Establishment of the World Trade Organization (WTO): One of the most significant
outcomes of the Uruguay Round was the creation of the WTO, which replaced GATT
as the primary international trade organization. The WTO came into existence on
January 1, 1995, and incorporated all the agreements reached during the Uruguay
Round.
Key Features of GATT

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GATT aimed to create a more predictable and stable international trading system by
establishing a set of rules and principles to govern international trade. Some of its key features
include:
1. Most-Favored-Nation (MFN) Principle
The MFN principle is one of the cornerstones of GATT. It requires member countries to extend
the same trade concessions to all other member countries. In other words, if a country grants a
trade concession to one member, it must extend the same concession to all other members. This
principle aims to prevent discrimination and promote equal treatment in international trade.
2. National Treatment Principle
The national treatment principle requires member countries to treat imported goods no less
favorably than domestically produced goods once they have entered the market. This principle
ensures that imported goods are not subject to discriminatory taxes or regulations that would
disadvantage them compared to domestic products.
3. Tariff Binding and Reduction
GATT aimed to reduce tariffs and other trade barriers through multilateral trade negotiations.
Member countries committed to binding their tariffs at agreed-upon levels and reducing them
over time. Once a tariff was bound, it could not be increased without compensation to affected
trading partners.
4. Transparency and Predictability
GATT emphasized the importance of transparency and predictability in international trade.
Member countries were required to publish their trade regulations and make them accessible
to other members. This transparency aimed to create a more stable and predictable trading
environment.
5. Dispute Settlement
GATT established a dispute settlement mechanism to resolve trade disputes between member
countries. The mechanism aimed to provide a fair and impartial process for resolving disputes
and ensuring that member countries adhered to their trade commitments. The Dispute
Settlement Understanding (DSU), introduced during the Uruguay Round, further strengthened
the dispute settlement process by making it more binding and effective.
6. Reciprocity
GATT operated on the principle of reciprocity, which required member countries to provide
mutual concessions in trade negotiations. This principle aimed to ensure that trade negotiations
resulted in balanced and mutually beneficial outcomes.
7. Special and Differential Treatment for Developing Countries
GATT recognized the unique challenges faced by developing countries in international trade.
As a result, it included provisions for special and differential treatment for developing
countries. These provisions allowed developing countries to receive more favorable treatment
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in certain areas, such as longer transition periods for implementing trade commitments and
preferential market access.
Relevant Case Laws
Several important case laws have shaped the interpretation and application of GATT principles.
Some notable cases include:
**1. Banana Dispute (EC - Bananas III, WT/DS27)
The Banana Dispute involved a challenge by the United States and several Latin American
countries against the European Community's (EC) banana import regime. The complainants
argued that the EC's preferential treatment of bananas from former European colonies violated
the MFN principle and other GATT provisions. The WTO ruled in favor of the complainants,
and the case highlighted the importance of the MFN principle in ensuring non-discrimination
in international trade.
2. US - Shrimp/Turtle (WT/DS58)
The US - Shrimp/Turtle case involved a challenge by India, Malaysia, Pakistan, and Thailand
against a U.S. regulation that required shrimp imports to be harvested using turtle-excluder
devices to protect endangered sea turtles. The complainants argued that the regulation violated
GATT principles by imposing discriminatory trade barriers. The WTO ruled that while
environmental protection is a legitimate objective, trade measures must be applied in a non-
discriminatory manner. The case emphasized the need to balance environmental protection
with GATT principles.
3. Brazil - Retreaded Tyres (WT/DS332)
The Brazil - Retreaded Tyres case involved a challenge by the European Communities against
Brazil's ban on the importation of retreaded tyres. The complainants argued that the ban
violated GATT provisions by imposing discriminatory trade restrictions. The WTO ruled that
Brazil's ban was justified on environmental and public health grounds, but it must be applied
in a non-discriminatory way.
4. Brazil - Aircraft Case (1999):
In this case, Canada challenged Brazil's export subsidies for its aircraft industry, arguing that
they violated GATT rules on subsidies. The WTO Appellate Body ruled that Brazil's subsidies
were inconsistent with the Agreement on Subsidies and Countervailing Measures. The case
emphasized the importance of fair competition and compliance with subsidy rules.
These cases illustrate the role of the dispute settlement mechanism in interpreting and enforcing
GATT and WTO rules. They also highlight the evolving nature of international trade law and
the importance of balancing trade liberalization with other policy objectives.
Conclusion
The historical development of GATT reflects the evolution of international trade governance
over several decades. From its modest beginnings in 1947 to its transformation into the WTO,

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GATT has played a crucial role in promoting free trade and reducing trade barriers. The
agreement's key principles, such as the MFN principle, national treatment, and tariff reduction,
have shaped the modern global trading system. The inclusion of dispute settlement mechanisms
and provisions for safeguard measures has further strengthened the framework for international
trade.
The landmark cases under GATT and WTO demonstrate the dynamic nature of trade law and
the ongoing efforts to balance trade liberalization with other policy objectives. As the global
economy continues to evolve, the principles and rules established by GATT will remain
foundational to the multilateral trading system, ensuring a fair and predictable environment for
international trade.
This comprehensive overview covers the historical development and key features of GATT,
along with relevant case laws, to provide a thorough understanding of the agreement's
significance in the context of international trade law.

References:
1. Jackson, John H. (1969). "World Trade and the Law of GATT: A Legal Analysis of the
General Agreement on Tariffs and Trade." Indianapolis: Bobbs-Merrill Company.
o This is a seminal work on GATT's legal framework and early development
2. Dam, Kenneth W. (1970). "The GATT: Law and International Economic Organization."
Chicago: University of Chicago Press.
o Provides comprehensive analysis of GATT's organizational structure and legal
principles
3. Hudec, Robert E. (1975). "The GATT Legal System and World Trade Diplomacy." New
York: Praeger Publishers.
o Focuses on GATT's dispute settlement system and early case law
4. Trebilcock, M.J., & Howse, R. (2005). "The Regulation of International Trade." 3rd
Edition. London: Routledge.
o Covers GATT principles, Uruguay Round, and transition to WTO
5. World Trade Organization. (1995). "The Results of the Uruguay Round of Multilateral
Trade Negotiations: The Legal Texts." Geneva: GATT Secretariat.
o Official documentation of Uruguay Round outcomes
6. Bhagwati, Jagdish. (1988). "Protectionism." Cambridge: MIT Press.
o Discusses the economic principles behind GATT and trade liberalization
7. Van den Bossche, Peter. (2008). "The Law and Policy of the World Trade Organization:
Text, Cases and Materials." Cambridge University Press.

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 o Comprehensive analysis of GATT/WTO case law
8. Irwin, Douglas A. (1995). "The GATT in Historical Perspective." American Economic
Review, 85(2), 323-328.
o Historical analysis of GATT's formation and early years
9. Palmeter, D., & Mavroidis, P.C. (2004). "Dispute Settlement in the World Trade
Organization: Practice and Procedure." Cambridge University Press.
o Detailed analysis of the cases mentioned in the document
10. Hoekman, Bernard M., & Kostecki, Michel M. (2009). "The Political Economy of the
World Trading System: The WTO and Beyond." Oxford University Press.
o Covers the political and economic aspects of GATT's evolution

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