GATT (General Agreement Of Tariffs And Trade)- Functions, Objectives, Principles, Challenges!
The eighth round of the trade talks took place in 1986 to 1993. This round of GATT negotiation started at Punta Del Esta in Uruguay in September 1986 which was concluded by the end of 1990. The Director General of GATT Aurthur Dunkel drafted a draft final act of the Uruguay round which was also known as the Dunkle Draft Text.
Check out this article on United Nations Peacekeeping for UPSC Exam here!
Challenges faced by GATT
The challenges faced by GATT are given as follows:
- The nature of world trade changed by 1980. This was not addressed by GATT as it did not address the trade in services between Nations..
- GATT reduced the rights of a sovereign to rule its people like other free trade agreements. The agreement on trade and tariffs required the countries to synchronize their domestic laws in accordance with the agreement to gain trade benefits. However, since countries did not agree to this provision it led to disputes between the Nations.
- The rapid proliferation of the bilateral and regional trade free trade agreements like RCEP, NAFTA, etc across the globe also raised concern over trade diversion.
Also, read the article on Oil Diplomacy for UPSC Exam here!
UPSC Beginners Program
Get UPSC Beginners Program - 60 Days Foundation Course SuperCoaching @ just
People also like
Difference between GATT & WTO
The differences between GATT and WTO are presented in a tabular format for better understanding.
| GATT | WTO |
| GATT was a multilateral agreement that was formed to reduce tariffs. It was a series of rules without any institutional framework with just an ad Hawk secretariat, originated from the attempt to establish an International Trade Organisation in 1940. | WTO is a permanent institution with a proper institutional framework and its own secretariat. |
| GATT covered only trade in goods | WTO not only covers goods but also services in trade which includes aspects of intellectual property. |
| GATT was a mere set of rules which had no institutional foundation. It was a multilateral agreement with a small functioning associate secretariat | WTO is a global body that has a permanent institution along with a secretariat. |
| GATT was an ad hoc provisional agreement | WTO has goals and existence that are full and permanent. |
| The nations that participated in GATT were called contracting parties | The members of WTO are called member states |
| GATT was less powerful and the participating countries did not pay much heed and attention to it. It also had a very slow and inefficient dispute resolution system which made the countries not take it seriously | The WTO holds a lot of power and accounts for nearly 96% of the global GDP. It has a much faster and efficient dispute settlement department. |
| GATT was initially very selective in nature and it was much later in the 1980s when the notion of plurilateral nature of agreements was added. | From the very get-go, the WTO involves memberships and commitments which are multilateral in nature. |
| Under GATT, domestic legislation could continue even if they violated any agreements of GATT. | The same was not permissible under WTO. |
| GATT was signed only by 23 nations | WTO has 164 member states who collectively work towards international trade. |
| GATT has a permanent appellate body to review findings and settle disputes. | Disputes under WTO are resolved faster as the settlement system has a select time frame |
Check out this article on East African Community EAC here!
Conclusion
GATT had some limitations like the demand that countries give up some autonomy to follow the free trade agreement norms. GATT was beneficial for many national economies by increasing connectedness which reduces the likelihood of World War II and better communication.
Check out the test series for UPSC IAS Exam here.
UPSC Previous Year Questions on GATT
Q 1. India enacted The Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to: [CSE 2018]
- ILO
- IMF
- UNCTAD
- WTO
We hope all your doubts regarding the GATT are addressed after going through this article. Testbook provides comprehensive notes for different competitive examinations. It has always assured the quality of its product like content pages, live tests, Gk and current affairs, mocks, and so on. Ace your UPSC preparation with the Testbook App!
