General Information on GATT
The “General Agreement on Tariffs and Trade” (GATT) is a multilateral trade agreement aimed at liberalizing international trade and gradually reducing trade barriers such as tariffs and quotas. It is a central element of the post-World War II international economic order and is considered the predecessor of the World Trade Organization (WTO).
GATT entered into force on January 1, 1948, and was originally of a provisional nature. Several negotiation rounds and legal amendments have significantly expanded and deepened the content of the agreement over the decades. With the establishment of the WTO in 1995, GATT was continued and supplemented within the framework agreements of the WTO.
Background and Development
Historical Context
After World War II, there was an international consensus that protectionist trade policies like those of the 1930s could contribute to economic crises. Under the leadership of the United Nations and the USA, GATT was created as a binding set of rules intended to lay the foundation for open markets and balanced trade relations.
Contracting Parties and Membership Development
Originally, GATT was signed by 23 states. By the time the WTO was established in 1995, the agreement was supported by 128 contracting parties. With the founding of the WTO in 1995, all WTO member states also became parties to GATT 1994. The WTO now counts over 160 members.
Legal Nature and Fundamental Principles
Legal Character of GATT
GATT is an international treaty that, as a multilateral agreement, establishes the rights and obligations of the contracting states. The principles and rules of GATT underpin large areas of international economic law and have effects both between individual states and within international organizations.
Core Principles
Most-Favoured-Nation Clause (Art. I GATT)
The most-favoured-nation principle stipulates that a contracting state must grant every other contracting party the most favourable trade conditions that it grants to any third party. This obligation guarantees non-discrimination in international trade.
National Treatment (Art. III GATT)
National treatment obliges contracting states not to treat imported goods less favourably than like domestic goods. The goal is to prevent hidden protectionist measures.
Tariff Binding and Tariff Reduction (Art. II, XXVIII GATT)
GATT provides that contracting parties bind tariff rates (“tariff bindings”) and establish tariff reductions in successive negotiation rounds. Changes are only allowed under certain conditions.
Prohibition of Non-Tariff Trade Barriers (Art. XI GATT)
The agreement prohibits, with few exceptions, quantitative restrictions and similar non-tariff trade barriers.
Transparency and Publication Requirements (Art. X GATT)
GATT requires contracting parties to ensure transparency of their trade policy measures and the publication of relevant laws and regulations.
Structure and Contents of GATT
Structure of the Original Agreement
GATT consists of a basic text and various annexes (schedules) that contain national tariffs and exemptions. The main text is divided into numerous articles, which govern general rules and specific matters. The annexes primarily include national tariff commitments and product lists.
Exceptions and Special Provisions
General Exceptions (Art. XX GATT)
GATT provides exceptions for measures taken to protect public morals, human, animal or plant life, as well as to safeguard national interests.
Security Exceptions (Art. XXI GATT)
Measures necessary to safeguard a state’s essential security interests are exempted from GATT provisions.
Provisional Safeguard Measures (Art. XIX GATT – “Safeguards”)
In the event of a sudden import surge, states may take temporary safeguard measures against such imports to protect the domestic economy.
GATT Rounds and Further Development
The Most Important Negotiation Rounds
Over the decades, numerous negotiation rounds (“Rounds”) were held, introducing or abolishing further provisions, measures, and exceptions, and significantly deepening liberalization. The eight most important rounds, including the “Uruguay Round,” culminated in the creation of the WTO in 1995.
GATT 1947 and GATT 1994
The original 1947 GATT (GATT 1947) was incorporated into what is known as GATT 1994 through the creation of the WTO. In addition to the original text, GATT 1994 includes all modifications and supplementary agreements (“Protocols and Understandings”) made since then.
Institutional Framework and Dispute Settlement
Transition to the WTO
With the entry into force of the WTO on January 1, 1995, the rules of GATT became an integral part of WTO law. The WTO has a binding dispute resolution system, enabling effective enforcement of rights and obligations under the GATT agreement.
Dispute Settlement Procedure
The WTO’s Dispute Settlement Understanding (DSU) sets out the detailed procedures for resolving disputes between member states regarding the interpretation and application of GATT. The decisions are binding and can also legitimize enforcement measures.
Relationship with Other Trade Agreements
Common Market Organizations and Regional Agreements
GATT permits regional trade agreements such as customs unions and free trade areas (Art. XXIV GATT), provided they lead to further liberalization and do not create new trade barriers against third countries.
Relationship with International Law
GATT is part of modern international economic law and affects numerous related agreements, including the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Significance of GATT in International Trade Law
GATT marks a milestone in the multilateral economic order. It has played a key role in liberalizing the world economy, defusing trade disputes, and establishing standards for transparent, non-discriminatory trade relations. Despite numerous challenges and adjustments, GATT remains a central element of the global economic architecture.
Literature and Further Sources
- General Agreement on Tariffs and Trade (GATT) – English original text via the WTO
- Schöttle, K. W.: ‘Das GATT im Wandel’, Munich 2016.
- WTO: ‘Understanding the WTO: The Agreements’ (Official Publication)
Note: This article provides a comprehensive, factually structured, and detailed presentation of the term GATT for a legal encyclopedia. The information presented here does not replace individual legal advice.
Frequently Asked Questions
What is the significance of GATT in international trade law?
The General Agreement on Tariffs and Trade (GATT) forms the historical and legal foundation for today’s multilateral trading system. From a legal perspective, GATT is an international treaty that has been further developed by the contracting parties through multiple rounds and was integrated into the legal framework of the World Trade Organization (WTO) in 1995. GATT regulates, in particular, fundamental principles such as the most-favoured-nation principle (Art. I GATT), the national treatment principle (Art. III GATT), as well as rules on tariffs and other trade barriers. It is therefore of central importance for the legal structuring of global trade in goods, as it provides binding and enforceable rules and enables a dispute resolution system.
How is dispute settlement conducted under GATT rules?
GATT itself originally provided only informal and diplomatic consultations for the resolution of disputes between contracting parties, with decisions usually requiring unanimity and no binding dispute settlement body existing. With the establishment of the WTO and the integrated Dispute Settlement Understanding (DSU), the dispute settlement procedure was modernized and made legally binding. Today, disputes are decided by panels and an Appellate Body, whose rulings are binding on member states. This significantly strengthens compliance with and enforcement of GATT law.
To what extent are exceptions to the GATT principle of free movement of goods permissible?
The legal provisions of GATT set out specific exceptions to the basic principles in various articles. For example, Art. XX GATT, under certain conditions, allows deviations to safeguard public interests, such as the protection of the life and health of humans, animals or plants, or to safeguard public morals. Security interests (Art. XXI GATT) or measures to protect the balance of payments (Art. XII, XVIII GATT) also open up possibilities to deviate temporarily or permanently from GATT provisions. However, the application of these exceptions is to be interpreted narrowly and is subject to strict scrutiny in the dispute settlement process.
What is the legal significance of the most-favoured-nation principle in GATT?
The most-favoured-nation principle enshrined in Art. I GATT obliges the contracting parties to grant all other GATT members the same trading advantages, rights, and benefits that they grant to any other member. The goal is to prevent unjustified discrimination and promote general, non-discriminatory trade in goods. Within WTO law, this principle is binding, and violations can be legally sanctioned in dispute settlement procedures. Certain preferences (e.g., regional trade agreements or special provisions for developing countries) are allowed as specific exceptions and are explicitly regulated in GATT.
How do GATT regulations affect national legislative powers?
GATT obliges contracting parties to harmonize their national legislation and administrative practice with the internationally agreed requirements. This means that national laws that violate GATT rules (e.g., by discriminatory tariffs) can be declared incompatible in an international dispute procedure, which may lead to obligations to make adjustments. Nevertheless, national sovereignty is fundamentally preserved as long as the minimum requirements of GATT are met and there are no violations of international law. Practical implementation is in the hands of national legislators, though GATT limits their regulatory freedom.
What is the role of reservations and protocols in the legal context of GATT?
Legally binding protocols (such as tariff concession lists) and reservations (such as temporarily limited deviations from certain provisions) were created within the GATT system as instruments to address specific national interests and circumstances. However, such protocols and reservations must be expressly agreed upon in the context of negotiations and are part of the applicable treaty texts. In case of dispute, it is examined to what extent a particular measure is covered by a reservation or protocol, though the fundamental structure of GATT must still be maintained.
How does GATT relate to other international economic agreements?
GATT provisions are not legally isolated but often coexist with bilateral or regional trade agreements. In case of conflicts, the principles of compatibility codified in GATT and WTO law, as well as, where applicable, the principle of specialty, apply, meaning that more specific provisions may take precedence over general rules. The interpretation and application of multiple competing agreements are carried out in light of customary international law and the agreements of the contracting parties, with WTO law now constituting the superior multilateral trade regime.
