General Agreement On Tariffs And Trade (GATT):

The GATT was a multilateral trade agreement signed originally by 96 governments at the General Conference on October 30, 1947 and came into force on January 1, 1948. It was a forum where the contracting parties met from time to time to set out rules of conduct for international trade relations, and for multilateral negotiations regarding the solution of trade problems and to enlarge their trade.

The principal objectives of GATT are:

i. To promote free trade through the removal of the existing trade barriers, especially tariffs, quotas and embargo.

ii. To eliminate discriminations in international trade. To this end, every member nation is expected to have a single tariff rate on a particular item for all member nations.

iii. To prevent the establishment of further trade barriers by getting member

nations to agree to consult together rather than take unilateral actions.

The ultimate aim of establishing liberal world trading system as noted by Jhingan (2001) was to raise living standard, ensure full employment through a steadily growing effective demand and real income, develop fully the resources of the world, and expand the production and exchange of goods on global level.

The major rounds of GATT negotiations include the Kennedy Round (1964 - 1967), the Tokyo Round (1973 - 1979) and the Uruguay Round (1986 - 1994). Trade negotiations conducted under the auspices of GATT have resulted in significant reductions in the average level of world industrial tariffs, as well as directed special attention towards the trade problems of developing countries.

The major problems of GATT are:

i. Non-adherence to the principle of most favoured nations treatment.

ii. The exclusion of many developing countries from its membership as a result of which GATT is regarded as a rich countries' club.

iii. The Articles of Agreement has been waived on a number of occasions, to help members solve balance of payment difficulties e.g. American protection of her agricultural sector.

At the conclusion of the Uruguay Round in Marrakech, Morocco on 15th April 1994, the final Act of Agreement establishing World Trade Organisation (WTO) as successor to the GATT was signed by 111 countries.