General Agreement on Tariffs and Trade

Lore & Background

The GATT was first conceived during preparatory sessions in Geneva in 1947, not at the United Nations Conference on Trade and Employment (which was held in Havana). The International Trade Organization (ITO) was one of the ideas proposed at that conference, but after the withdrawal of the United States these negotiations collapsed. The GATT was signed by 23 nations in Geneva on 30 October 1947 and came into force on 1 January 1948. From the outset, government procurement was excluded from the scope of the agreement.

The GATT was updated in a series of nine global trade negotiation rounds between 1947 and 1995. These included the Geneva Round (1947), Annecy Round (1949), Torquay Round (1951), Geneva Round (1956), Dillon Round (1960–1962), Kennedy Round (1964–1967), and others. The Kennedy Round, named after U.S. President John F. Kennedy

Reader's Guide

The General Agreement on Tariffs and Trade (GATT) was a foundational legal agreement that promoted international trade by reducing or eliminating trade barriers such as tariffs and quotas. It was signed by 23 nations in 1947 and applied provisionally until 1995, when it was succeeded by the World Trade Organization (WTO). The GATT's significance lies in its success in reducing average tariff levels for major participants from about 22% in 1947 to 5% after the Uruguay Round in 1999, a change experts partly attribute to GATT and the WTO. The agreement was updated through nine rounds of negotiations, each addressing tariff reductions and trade barriers. The Kennedy Round (1964–1967) notably achieved an average 35% tariff cut, though sensitive products like textiles and chemicals were excepted. The GATT also introduced Part IV, which absolved developing countries from according reciprocity to developed countries. Its legacy continues through the WTO, which maintains the original GATT text (GATT 1947) with modifications (GATT 1994). Nations not party in 1995 must meet minimum conditions to accede; as of September 2019, 36 nations were on that list.

Did You Know?

• The GATT was signed by 23 nations in Geneva on 30 October 1947 and applied on a provisional basis from 1 January 1948.
• The GATT remained in effect until 1 January 1995, when the World Trade Organization (WTO) was established.
• Average tariff levels for major GATT participants were about 22% in 1947 but fell to 5% after the Uruguay Round in 1999.
• The GATT's major intellectual architects included Ernst-Ulrich Petersmann, Jan Tumlir, and John Jackson.

From the Ashes of the ITO: GATT's Reluctant Birth

In the aftermath of World War II, the United States championed the creation of a new multilateral architecture for global economic governance. Between 1945 and 1946, Washington took concrete steps toward establishing a dedicated trade body, proposing an international conference to draft a charter for such an organization. That ambition crystallized at the 1947 United Nations Conference on Trade and Employment, where the International Trade Organization was envisioned as a permanent institution operating alongside the World Bank and the International Monetary Fund. More than fifty nations participated in drafting the ITO's founding charter, but the entire project collapsed when the United States withdrew its support. The GATT emerged directly from this failure. Preparatory sessions ran in parallel at the same conference, and on 30 October 1947, twenty-three nations signed the agreement in Geneva. Rather than establishing a full-fledged organization, the signatories applied the text on a provisional basis beginning 1 January 1948. Notably, government procurement was carved out of the agreement's scope from the very start, limiting its reach even as it set the stage for decades of trade liberalization.

Nine Rounds of Progressive Liberalization

Between 1947 and 1995, the GATT framework was refined through nine successive rounds of multilateral negotiation, each expanding participation and deepening tariff cuts. The second round in Annecy, France, in 1949 drew thirteen countries and produced roughly five thousand individual tariff reductions. By the Torquay Round of 1951 in England, thirty-eight nations had joined the process, securing 8,700 tariff concessions that brought remaining duties down to three-quarters of their 1948 levels. The contemporaneous U.S. rejection of the Havana Charter cemented the GATT's position as the de facto governing body for world trade. The Geneva Round of 1955–56 eliminated or reduced two and a half billion dollars in tariffs among twenty-six participants. The Dillon Round (1960–1962), named for U.S. Treasury Secretary Douglas Dillon, cut over four and a half billion dollars in duties and opened discussions tied to the emerging European Economic Community. The Kennedy Round (1964–1967), honoring President John F. Kennedy's Trade Expansion Act of 1962, shifted focus toward the broader structural challenges posed by European integration and Japan's rising export power.

Measurable Impact: The Tariff Story

The central promise of the GATT was straightforward: lower the walls between markets. Its preamble committed signatories to the substantial reduction of tariffs and other trade barriers, the elimination of preferential treatment, and a reciprocal and mutually advantageous approach to these goals. The results speak in concrete numbers. When the agreement was first signed in 1947, average tariff levels among major participants stood at approximately 22 percent. Through successive rounds of negotiation and the eventual Uruguay Round, that figure had fallen to roughly 5 percent by 1999. Trade experts widely attribute a significant share of this dramatic decline to the institutional framework that GATT and its successor the WTO provided. The agreement's design—targeting both tariffs and quotas, insisting on reciprocity, and building in mechanisms for periodic renegotiation—created a self-reinforcing cycle in which each round of concessions set a lower baseline for the next. What began as a provisional stopgap in 1948 thus became, over nearly five decades, the primary engine driving the global reduction of trade barriers.

From Provisional Agreement to Permanent Institution

The GATT operated on a provisional basis for nearly four decades before being formally absorbed into a more robust institutional structure. On 15 April 1994, one hundred and twenty-three nations reached agreement in Marrakesh, and on 1 January 1995 the World Trade Organization came into existence as the direct successor to the GATT, established as part of the Uruguay Round Agreements. Crucially, the original 1947 GATT text did not simply vanish; it remains in force under the WTO framework, though it is now subject to the modifications introduced by GATT 1994. For nations that were not parties to the GATT in 1995, accession to the WTO requires meeting minimum conditions laid out in specific documents. As of September 2019, thirty-six nations remained on the list of those still working through that process. The intellectual architecture of the GATT system is credited to several key figures, including the GATT lawyer Ernst-Ulrich Petersmann, economics professor Jan Tumlir at the Geneva Graduate Institute, and U.S. law professor John Jackson, whose collective work shaped the legal and economic foundations that continue to underpin global trade governance.