Final answer:
GATT was a temporary agreement aimed at tariff reduction while the WTO is a permanent organization also covering services and IP. The WTO has stronger, binding dispute resolution mechanisms, and unlike GATT, it operates on the principle of nondiscrimination among member states.
Step-by-step explanation:
The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) are related but distinct entities with different scope and authority in the international trade landscape. Initially, GATT was a temporary multilateral agreement aimed at reducing tariffs and other trade barriers; it was signed by 23 nations in 1947 and held a series of negotiation 'rounds' that successfully lowered tariffs substantially over several decades. In contrast, the WTO, which was established in 1995, is a permanent organization that not only deals with goods but also services and intellectual property, providing a broader scope of trade management and a legal framework for international trade.
Another key difference is the strength and procedure of dispute resolution. While GATT had less formalized dispute resolution mechanisms, the WTO has a well-defined and binding dispute settlement process that takes precedence over national courts. This, however, has led to criticisms that it may disproportionately benefit large multinational corporations over smaller entities. Moreover, unlike GATT which often provided special terms for specific industries or countries, the WTO operates on the principle of nondiscrimination, where any trade barriers must apply equally to all member states.