General Agreement on Tariffs and Trade

Toward the end of World War II, representatives of the US and its Allied Forces endeavored to work out the arrangements for a new world order in the post war era. As a result of these negotiations, after World War II the US and its Allies planned to establish three important international institutions to liberalize trade and payment.

1. Three institutions + UN

I. International Monetary Fund (IMF) was established to facilitate international payments.

II. International Bank for Reconstruction and Development. To encourage free flow of private capital, International Bank for Reconstruction and Development (IBRD, now the World Bank) was also established.

III. To facilitate free trade, International Trade Organization (ITO) was to be born.

IV. As a political complement to these institutions, United Nations was also established in 1945 to replace the League of Nations.

GATT was the result of an international conference held at Geneva in 1947 to consider a draft charter for the International Trade Organization (ITO). The US initiated negotiations with 22 other countries that led to commitments to regulate 45,000 tariff rates.

Technically, GATT was viewed as an agreement under the provisions of US Reciprocal Trade Act of 1934, and hence did not require approval of Congress. So GATT began its provisional existence on January 1, 1948, when 23 contracting parties signed the agreement.