General Agreement on Trade and Tariff-Gatt

Topics: World Trade Organization, European Union, International trade Pages: 5 (1080 words) Published: October 16, 2012

* GATT-General agreement on TRADE and TARRIF.
* Older version of WTO.
* Formed to solve the international trade disputes.
Following World War II, the victor nations sought to create institutions that would eliminate the causes of war. Their principles were to resolve or prevent war through the United Nations and to eliminate the economic causes of war by establishing international economic institutions.

Till 1986 it was running smoothly , there was no point of any conflict or dispute among its member countries . All members were free to abide by its rule on there will. There was no mandatory obligation or any hard and fast rule to follow. But during 1986, European and American countries felt economic slow down and these countries were going through high recession period. In order to counter this economic problem they arranged a meeting to bring changes in GATT. And in the next meeting of GATT members European and American countries started to make hue and cry for amendment. Finally they convinced all other members on this issue and after a long discussion a committee of 20 to 25 members was organized under the presiding of ARTHUR DUNCKEN. A full fledged draft containing 2000 resolutions was prepared and it was given the name DUNCKEN DRAFT. Later on it was renamed to GATT AGREEMENT and from 1995 it became WTO agreement.

Till 14th december 1994, Indian government was in no mood to sign the GATT agreement. But on 15th december 1994, it took U turn and gave its approval to the so called GATT agreement. On being asked by media about the reason for such a big and fatal decision, the then representative of India gave a very insulting statement – “BEGGARS HAVE NO CHOICE”.

An amazing incident took place the very next day that 77 countries signed GATT agreement following India. All those countries were the member of G-77 group of which India was the president. But it was not a wise decision from our point of view rather it was a decision taken in compulsion and under BLACKMAILING by U.S.A and European countries.

* Financial crisis in 1991.
* Mortgaged 47 metric ton in BANK OF ENGLAND.
* U.S.A blackmailed to sign when asked further help.
* Finally India signed the agreement on 15th dec 1994.
* U.S.A signed it in 1995.
* Before giving its approval, Bill Clinton made changes in its constitution. * Under the section 102 of American constitution it was added—”Whenever there will be a dispute between America and GATT, ALWAYS AMERICAN LAW WILL PREVAIL OVER GATT. Not in just some of the cases, not in just most of the cases but in every case American constitution will recede over GATT”. * In 1996 European countries gave their consent to it after applying the same strategy. * Hence America and European countries got the edge to defy the GATT. GATT IN ACTION (ENGULFING INDIA)

After 10 years of grace period it came in action in JAN 2005.It contains total 2000 resolutions that are mandatory to be obliged. First para of first chapter dictates - no single element of this draft will considered to be agreed till the whole package is agreed. How is it ENGULFING INDIA???

The answer to the same can be given on the various fields of agreements under GATT…. Various agreements in GATT:
* Agricultural agreement–
Under this agreement government has to decrease various subsidies given to the farmers. Two types of subsidy::

1. Direct subsidy-
minimum supporting price fixed by the
government on agro products.
2. Indirect subsidy-
Subsidy on fertilizers, electricity, seeds etc.
Indian government was given an ultimatum to abolish 1 LAKH 16 THOUSAND CRORE subsidy...
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