Wto and Its Effect

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PART A

➢ GENERAL AGREEMENT ON TARIFFS AND TRADE

The General Agreement on Tariffs and Trade (GATT), multilateral treaty between governments, was signed in 1947 and came into force on 1st January 1948.

Objectives:

The primary of GATT is to expand international trade by liberalizing trade so as to bring about all around economic prosperity. The Preamble to the GATT mentions the following as its important objectives:

1. Raising standard of living. 2. Ensuring full employment and a large and steadily growing volume of real income and effective demand. 3. Developing full use of resources of the world. 4. Expansion of production and international trade.

For the realization of its objectives, GATT has adopted the following principles:

1. Non-discrimination: the principle of non-discrimination requires that no member country shall discriminate between the members of GATT in the conduct of international trade. To ensure non-discrimination the members of GATT agree to apply the principle of the most favoured nation (MFN) to all import and export duties. This means that each mission shall be treated as well as the most favoured nation. As far as quantitative restrictions are permitted they too are to be administered without favor.

However certain expectations to this principle are allowed for instance GATT, does not prohibit economic integration such as free trade areas or customs union, provided the purpose of such integration is “to facilitate trade between the constituent territories and not to raise barriers to the trade of other parties.” GATT also permits the members to adopt measures to counter dumping and export subsidies.

2. Prohibition of quantitative restriction: GATT rules seek to prohibit quantitative restrictions as far as possible and limit restrictions on trade to the less rigid tariffs.…...

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