General Agreement on Tariffs and Trade (GATT)

General Agreement on Tariffs and Trade (GATT), a never‐signed but generally observed agreement that governed international trade from 1948 until 1995, when it was incorporated into the structure of the World Trade Organization (WTO).The ideas behind GATT originated during the 1930s. The Great Depression and the coming to power of fascist leaders had led to a breakdown in multilateral trade relations. Believing that non‐cooperative trade policies would aggravate the economic depression and possibly lead to war, American diplomats, notably Secretary of State Cordell Hull, pushed for a resumption of international trade. Under Hull's leadership, the United States entered into a series of bilateral reciprocal‐trade agreements with various countries.

World War II gave American planners the impetus to push for an international trade organization that would, they hoped, ensure a prosperous and therefore peaceful postwar world. The blueprint for an international trade organization (ITO) was set forth in December 1945, but the U.S. Congress failed to ratify the ITO in 1948. Rather than try to create another trade organization, diplomats decided to make the ITO's charter the basis of GATT, which the United States then adhered to by executive agreement.

Seven rounds of GATT negotiations were held between 1947 and 1994, all aimed at lowering tariffs barriers and thereby increasing the volume of world trade. These goals were based on the principles of nondiscrimination in trade, the elimination of quantitative restrictions, and the settlement of trade disputes through consultation, not confrontation. Most influential was the so‐called Kennedy Round of discussions (1964–1967), which resulted in the deepest (around 35 percent) and broadest tariff reductions in history. Out of the Uruguay Round (1986–1994) came the genesis of the WTO, the first international‐trade organization to be formalized and (in 1996) ratified by Congress. Political controversy over American involvement in GATT, and then in the WTO, involved the issue of whether such trade agreements entailed some loss of sovereignty and to what extent freer trade might disadvantage labor by keeping wages low.
See also Depressions, Economic; Foreign Relations: The Economic Dimension; Foreign Trade, U.S.; Labor Movements; New Deal Era, The; Post–Cold War Era; Tariffs.

Bibliography

Kenneth W. Dam , The GATT, 1970.

Diane B. Kunz