The General Agreement on Tariffs and Tradewas the first worldwide multilateral free trade agreement. It was in effect from June 30, 1948 until January 1, 1995. It ended when it was replaced by the more robust World Trade Organization.
The purpose of GATT was to eliminate harmful trade protectionism. That had sent global trade down 65 percent during the Great Depression. By removing tariffs, GATT boosted international trade.
It restored economic health to the world after the devastation of World War II.
GATT grew out of the Bretton Woods Agreement. The summit at Bretton Woods also created the World Bank and the International Monetary Fund to coordinate global growth.
GATT lives on as the foundation of the WTO. The 1947 agreement itself is defunct. But, its provisions were incorporated into the GATT 1994 agreement. That was designed to keep the trade agreements going while the WTO was being set up. Then, the GATT 1994 is itself a component of the WTO Agreement.
The main differences are as follows: The GATT was a series of rules, a multilateral agreement without an institutional foundation and with just an ad hoc secretariat, originating from the attempt to establish an International Trade Organization in the1940s. The WTO is a permanent institution with its own secretariat.
The main purpose of the GATT was substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis. Another purpose of GATT was to reduce tariff.
