Explain the historical evolution, objectives and main principles of the General Agreement on Tariffs and Trade (GATT).

Historical Evolution of GATT

The evolution of GATT can be broadly divided into several phases, each marked by specific rounds of negotiations:

Phase 1: 1948-1955 (Initial Years)

• Objective: Primarily focused on tariff reductions on manufactured goods.
• Key Features: Established foundational principles; relatively limited scope.

Phase 2: 1956-1960 (Torquay Round)

• Objective: Expanded the scope to include agricultural products and some services.
• Key Features: Included the Enabling Clause, allowing developed countries to grant preferential treatment to developing countries.

Phase 3: 1961-1967 (Kennedy Round)

• Objective: Significant tariff reductions, particularly in the steel and chemical industries. Addressed the issue of trade restrictions.
• Key Features: The Kennedy Round marked the first attempt to address non-tariff barriers, although with limited success.

Phase 4: 1973-1979 (Tokyo Round)

• Objective: Focused on both tariff and non-tariff barriers.
• Key Features: The Tokyo Round introduced “codes” on various non-tariff measures like subsidies and countervailing duties, but these were voluntary and lacked enforcement mechanisms. This was a response to growing concerns about unfair trade practices.

Phase 5: 1986-1994 (Uruguay Round)

• Objective: Comprehensive trade liberalization, including agriculture, textiles, and services. Established a dispute settlement mechanism.
• Key Features: The Uruguay Round was the longest and most complex round of GATT negotiations. It resulted in the Agreement on Agriculture, the Agreement on Textiles and Clothing, and the General Agreement on Trade in Services (GATS). Crucially, it also established a more robust and binding dispute settlement understanding (DSU).

Round	Years	Key Objectives	Key Features
Torquay Round	1956-1960	Expand scope to agriculture and services	Enabling Clause
Kennedy Round	1961-1967	Reduce tariffs, address trade restrictions	First attempt to address non-tariff barriers
Tokyo Round	1973-1979	Reduce tariffs & non-tariff barriers	Introduction of voluntary codes on non-tariff measures
Uruguay Round	1986-1994	Comprehensive trade liberalization	Agreement on Agriculture, GATS, binding Dispute Settlement Understanding (DSU)

Objectives of GATT

The primary objectives of GATT, as enshrined in its Article I, were:

• Reduction of Tariffs: To progressively lower tariffs on goods traded between member countries.
• Non-Discrimination: To ensure that trade benefits were extended to all member countries equally.
• Transparency: To promote transparency in trade policies and regulations.
• Predictability: To create a predictable and stable trading environment.

Main Principles of GATT

Several core principles underpinned the functioning of GATT:

• Most-Favored-Nation (MFN) Treatment: Article I of GATT mandates that any advantage, privilege, or immunity granted to a product originating in one country must be immediately and unconditionally granted to all other members. This prevents discriminatory trade practices.
• National Treatment: Article III requires that imported goods be treated no less favorably than domestically produced goods once they have entered a country’s territory.
• Tariff Binding: Countries were required to bind their tariffs at agreed levels, preventing them from arbitrarily raising tariffs.
• Reciprocity: Trade concessions were typically granted on a reciprocal basis - country A lowers tariffs if country B does the same.
• Transparency: Members were required to publish their trade regulations and notify changes to the GATT Secretariat.

Despite its successes, GATT faced limitations. Its focus was primarily on merchandise trade, neglecting services and intellectual property. The voluntary codes on non-tariff barriers under the Tokyo Round were ineffective. The dispute settlement mechanism was also weak. These shortcomings led to the creation of the WTO.