Question

Explain the three principles that the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) were founded on.

Answer 1

The GATT and WTO were founded on principles of trade without discrimination, freer trade through negotiation, and predictability with stable, clear rules. GATT aimed at economic recovery post-WWII, while WTO expanded these goals and now includes most of the world's economies.

Step-by-step explanation:

The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) were founded on three main principles. These are:

1. Trade without discrimination, which includes most-favored-nation (MFN) treatment, meaning countries cannot normally discriminate between their trading partners and grant someone a special favor (such as a lower customs duty rate) without doing the same for all other WTO members.
2. Freer trade, accomplished gradually through negotiation, striving to lower trade barriers such as tariffs, quotas, and nontariff barriers that can obstruct international trade.
3. Predictability, with the assistance of binding and transparent rules, it ensures that trade policies are stable and predictable which is beneficial for businesses when planning their market strategies.

Formed in 1947, the GATT aimed at postwar economic recovery by offering a forum where countries could negotiate trade agreements to reduce tariffs and other trade barriers. The WTO, founded in 1995 as a successor to GATT, expanded these principles and included more nations, encompassing most of the world’s economies and serving as the primary international body governing global trade relations.