The General Agreement on Tariffs and Trade (GATT) is a legal agreement first signed by 23 countries on October 30, 1947 in Geneva, Switzerland. The GATT aimed “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis”, so that the economic recovery after World War II can be boosted.
Although the GATT is a legal agreement, it functions as an organization. Eight rounds of negotiation were completed, and the current round, the Doha Development Round, began in 2001 and is still not completed.
In December of 1993, after seven years of negotiation, the GATT reached an agreement among 117 countries, including the U.S. This round was in Uruguay, and therefore was called the Uruguay Round. The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations was the agreement reached in this round, and was signed in April 1994. The World Trade Organization (WTO) was created in this agreement. The WTO is the enforcing organization of the agreement, and it also started the current round in Doha. To join the WTO now, a nation needs to apply for the membership. Currently, there are 164 members in the WTO.
The GATT has lowered the tariff levels among the contracting parties. In 1947, the participants of GATT had an average tariff rates of 22%, and after 1994, the average tariff rates among participants became under 5%.
Check out this WTO website for more information regarding the GATT.
[Last updated in June of 2020 by the Wex Definitions Team]