General Agreement on Tariffs and Trade (GATT) - Business in United States of America

Identification: Accord among several capitalist countries reached soon after World War II that established some goals for the exchange of goods and services across international borders
Date: Signed on January 1, 1948
Significance: The GATT helped reopen and maintain access to foreign markets and products following more than a decade of a global depression and an accompanying decrease in exports. The new guidelines for trade contributed to a period of strong performance by American businesses and the U.S. economy in general.
The General Agreement on Tariffs and Trade (GATT) was created in 1947 by twenty-three countries to facilitate the exchange of goods and services between countries. It attempted to create a free trade system. It primarily tried to achieve this broad goal by reducing tariffs, or taxes on imports, as these taxes were the main obstacles to trade at the time.
The General Agreement on Tariffs and Trade was based on three broad principles: expanding trade by reducing tariffs, granting most favored- nation status to all members, and unconditional reciprocity. Thus, signatories to the agreement pledged to reduce taxes on imports while giving the same treatment to all other members as they provided to their best trading partner. To adhere to these principles, signatories to the GATT would hold periodic sets of multilateral talks. The participants would reach a series of agreements at the end of each set of negotiations to make progress toward a free trade system.
The early sets of talks made significant progress in cutting tariffs on trade in industrial goods between the United States and Western Europe. The Uruguay Round (1986-1993) was the last set of General Agreement on Tariffs and Trade negotiations. By this time, new trade issues had emerged. Agriculture, services such as banking, and the protection of copyrights and patents became points of contention among GATT signatories. The Uruguay Round ended with agreements to reduce trade barriers in all of these areas. Most important, however, it established in 1995 the successor to the General Agreement on Tariffs and Trade—the World Trade Organization.