What is GATT?
The General Agreement on Tariffs and Trade (GATT) was created in 1948 with the aim of strengthening international trade by reducing trade barriers between countries through negotiations. GATT was under the International Trade Organization that worked under the guidance of the United Nations. However, the International Trade Organization got sidelined as the United States refused to ratify it, causing GATT to evolve into a new organization called the World Trade Organization (WTO). In 1993, the last round of GATT was held in Uruguay before it transformed into the WTO.
What is WTO?
The World Trade Organization (WTO) replaced GATT in 1995. The WTO has more than 125 members, and over 90% of total international trade is governed by its rules. The most significant difference between the WTO and GATT is the establishment of a dispute settlement mechanism that has the power to impose trade sanctions against erring parties. The WTO has much stronger provisions for enforcing rules.
Key Takeaways
- GATT had a provisional legal agreement, while the WTO has a legally permanent provision.
- Members of the GATT were called contracting parties, whereas they are real members in the WTO.
- The scope of GATT was limited to trade in goods only, while the WTO has a broader scope, including services and intellectual property rights.
