The American and British governments established the GATT in 1948 to provide a system of rules governing international trade. The greatest achievements in international trade liberalizations have come through multilateral trade negotiations or ‘trade rounds’ under the auspices of the GATT. The main aims of the GATT were to ensure that;
- GATT members do not place tariffs on each other’s product
- Infant industries are protected by tariff but not quota
- GATT members inform each others of the domestic trade restrictions
- GATT negotiates general tariff cuts between members
Most of GATT’s early trade rounds were devoted to continuing the process of reducing tariffs.
Given its provisional nature and limited field of action, the success of the GATT in promoting and securing the liberalization of world trade over 47 years is incontestable. Continual reductions in tariffs alone encouraged a very high percentage growth in world trade in the 1950s and 1960s (around 08% annually).