SMU MBA ASSIGNMENTS

Answer : General Agreement on Tariff and Trade(GATT) was established on a provisional basis after the Second World War in the wake of other new multilateral institutions dedicated to international economic cooperation — notably the “Britton Woods” institutions now known as the World Bank and the International Monetary Fund.

The original 23 GATT countries were among over 50 which agreed a draft Charter for an International Trade Organization (ITO) — a new specialized agency of the United Nations. The Charter was intended to provide not only world trade disciplines but also contained rules relating to employment, commodity agreements, restrictive business practices, international investment and services.

In an effort to give an early boost to trade liberalization after the Second World War and to begin to correct the large overhang of protectionist measures which remained in place from the early 1930s-tariff negotiations were opened among the 23 founding GATT “contracting parties” in 1946.

WTO

World Trade Organization came into existence in 1995 after the desolation of General Agreement on Tariff and Trade (GATT).The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:

• Administering trade agreements
• Acting as a forum for trade negotiations
• Settling trade disputes
• Reviewing national trade policies
• Assisting developing countries in trade policy issues, through technical assistance and training programs
• Cooperating with other international organizations

The WTO has nearly 150 members, accounting for over 97% of world trade. Around 30others are negotiating membership. Decisions are made by the entire membership. Thesis typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements have been ratified in all members’ parliaments.

The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Decisions are normally taken by consensus.

Difference between WTO and GATT:-

The World Trade Organization is not a simple extension of GATT; on the contrary, incompletely replaces its predecessor and has a very different character. Among the principal differences are the following:

a. The GATT was a set of rules, a multilateral agreement, with no institutional foundation, only a small associated secretariat which had its origins in the attempt to establish an International Trade Organization in the 1940s. The WTO is permanent institution with its own secretariat.

b.bathe GATT was applied on a “provisional basis” even if, after more than forty years, governments chose to treat it as a permanent commitment. The WTOcommitments are full and permanent.

c.cither GATT rules applied to trade in merchandise goods. In addition to goods, theta covers trade in services and trade-related aspects of intellectual property.

d.While GATT was a multilateral instrument, by the 1980s many new agreements had been added of a plural-lateral, and therefore selective, nature. The agreements which constitute the WTO are almost all multilateral and, thus, involve commitments for the entire membership.