GATT Signed by 23 Nations in Geneva

Context

After World War II, governments sought to avoid the protectionist policies of the 1930s that had deepened economic distress and contributed to international tensions. The 1944 Bretton Woods conference had recommended an International Trade Organization to complement the International Monetary Fund and the World Bank as pillars of a new economic order. In 1946 the United States circulated detailed proposals for such an organization and convened preparatory meetings that led to the United Nations Conference on Trade and Employment.

What Happened

Negotiations for both the ITO charter and a separate tariff agreement took place in Geneva beginning in April 1947 under the Preparatory Committee. Twenty-three principal trading nations conducted simultaneous bilateral tariff talks under the principal-supplier rule and drafted general provisions drawn largely from the emerging ITO charter to protect the value of those concessions. Legal and practical hurdles, including ratification procedures and credentials for signatories, were addressed by a small secretariat team led by Eric Wyndham White and his deputy Julio Lacarte Muró. On October 30, 1947, the General Agreement on Tariffs and Trade was formally concluded and signed in Geneva.

Aftermath

The agreement entered into force provisionally on January 1, 1948, after the required share of trade was represented. It immediately put into effect thousands of tariff reductions affecting roughly ten billion dollars of trade. The larger ITO charter was completed in Havana in March 1948 but never entered into force after the United States declined to ratify it, leaving the GATT as the operative multilateral trade instrument.

Legacy

GATT governed the bulk of world trade for nearly five decades through eight subsequent negotiating rounds that progressively lowered tariffs and addressed new issues. Its core principles of most-favored-nation treatment, reciprocity, and transparency were carried forward when the World Trade Organization was established in 1995, incorporating the original 1947 text as GATT 1994. Historians view the agreement as a pragmatic success that delivered concrete liberalization even as ambitious institutional plans faltered.