A Theory of GATT/WTO

5 Pages Posted: 12 Feb 2018

See all articles by Peter Marcel Debaere

Peter Marcel Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Abstract

This note provides a few basic facts about the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO). We also investigate why we need those institutions from an economic perspective. In other words, we seek to understand what problems the GATT/WTO solve, and why without them the trade liberalizations that they seek would not emerge.

Excerpt

UVA-GEM-0153

Feb. 7, 2018

A Theory of GATT/WTO

In this note, we provide a few basic facts about the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO). We also investigate why we need those institutions from an economic perspective. In other words, we seek to understand what problems the GATT/WTO solve, and why without them the trade liberalizations that they seek would not emerge.

A Few Facts about GATT/WTO

The GATT came into existence in the aftermath of World War II. With the International Monetary Fund and the World Bank, it has been one of the cornerstone institutions of the liberal economic order since 1945. The primary objective of the founding nations was to create a framework to undo the high tariffs and beggar-thy-neighbor policies of the interwar period. During the Great Depression, the United States reverted to protectionist policies with the Smoot-Hawley Act of 1930. In response, many European countries increased their own tariffs, triggering a trade war that may well have worsened the depression. GATT negotiations since then have decreased the high interwar tariffs significantly (Table 1), and the WTO has reached almost universal membership.

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Keywords: General Agreement on Tariffs and Trade, GATT, World Trade Organization, WTO, historical economics, trade, international trade

Suggested Citation

Debaere, Peter Marcel, A Theory of GATT/WTO. Darden Case No. UVA-GEM-0153, Available at SSRN: https://ssrn.com/abstract=3121348

Peter Marcel Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=5794

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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