GATT vs. WTO

Attribute	GATT	WTO
Established	1947	1995
Full Form	General Agreement on Tariffs and Trade	World Trade Organization
Objective	To promote international trade by reducing trade barriers	To facilitate global trade, resolve trade disputes, and negotiate new trade agreements
Membership	Contracting parties	Member countries
Principles	Non-discrimination, reciprocity, binding commitments	Non-discrimination, transparency, predictability
Dispute Settlement	Consultations, panels, Appellate Body	Dispute Settlement Body, Appellate Body
Trade Rounds	8 rounds, including the Uruguay Round	Multiple rounds, including the Doha Round
Trade Agreements	Bilateral agreements between contracting parties	Various agreements covering goods, services, and intellectual property

Introduction

The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) are two international organizations that have played significant roles in promoting global trade and reducing barriers to commerce. While GATT was established in 1947 and eventually evolved into the WTO in 1995, both organizations share common objectives and principles. In this article, we will explore the attributes of GATT and WTO, highlighting their similarities and differences.

Historical Background

GATT was created after World War II with the aim of promoting international trade and preventing the protectionist policies that contributed to the Great Depression. It operated as a provisional agreement until the establishment of the WTO. On the other hand, the WTO was formed as a result of the Uruguay Round of negotiations, which aimed to expand the scope of GATT and address emerging issues in global trade.

Membership and Coverage

GATT had a limited membership, consisting of 23 original contracting parties, which expanded to 128 by the time it was replaced by the WTO. In contrast, the WTO has a broader membership, currently comprising 164 member countries. While GATT primarily focused on trade in goods, the WTO covers a wider range of areas, including services, intellectual property, and investment.

Dispute Settlement Mechanism

One of the significant differences between GATT and the WTO lies in their dispute settlement mechanisms. GATT relied on voluntary negotiations and lacked a binding dispute resolution process. In contrast, the WTO has a robust and binding dispute settlement system, which provides a forum for resolving trade disputes between member countries. This system has played a crucial role in ensuring the enforcement of trade rules and maintaining the stability of the global trading system.

Decision-Making Process

Another key distinction between GATT and the WTO is their decision-making processes. GATT operated on the basis of consensus among member countries, meaning that decisions required the unanimous agreement of all parties involved. This often led to delays and difficulties in reaching agreements. In contrast, the WTO operates on a more democratic and inclusive decision-making process, where decisions are made by majority vote. This allows for more efficient and timely decision-making, enabling the organization to respond to emerging trade issues effectively.

Trade Liberalization

Both GATT and the WTO share a common goal of promoting trade liberalization and reducing barriers to commerce. GATT achieved this through a series of multilateral trade negotiations known as "rounds." These negotiations aimed to lower tariffs and eliminate non-tariff barriers to trade. The most notable rounds were the Kennedy Round, Tokyo Round, and Uruguay Round. The WTO, as the successor to GATT, continues this objective by conducting further negotiations and addressing new challenges in global trade.

Enforcement of Trade Rules

While GATT relied on voluntary compliance with its rules, the WTO has a stronger enforcement mechanism. The WTO's Dispute Settlement Body (DSB) ensures that member countries adhere to their trade obligations. If a country is found to be violating WTO rules, the DSB can authorize retaliatory measures, such as imposing tariffs or trade restrictions, to encourage compliance. This enforcement mechanism provides a more effective means of ensuring that trade rules are respected and followed.

Conclusion

In conclusion, GATT and the WTO have played crucial roles in promoting global trade and reducing barriers to commerce. While GATT laid the foundation for international trade cooperation, the WTO expanded its scope and introduced more robust mechanisms for dispute settlement and decision-making. Both organizations share the common goal of trade liberalization, but the WTO has a broader membership and covers a wider range of areas. The enforcement of trade rules is also stronger under the WTO. Overall, the evolution from GATT to the WTO represents a significant step forward in the governance of international trade.