The GATT is a policy framework for negotiations to open (liberalize) national markets established in 1947after the Second World War.
It was built around 4 general principles that every country was expected to accept:
- Transparency: economic protectionism should take the form of tariffs (ie. taxes on imports).
- non-tariff barriers to trade are not allowed.
- Prohibited export-subsidies.
- Reciprocity: If one country lowers its tariffs against anothers exports, there should be matching reductions by the other member.
- Non-discrimination: no country should grant preferential treatment to another country, or group of countries.
- Parties to the agreement have to extend to each other the most favourable terms negotiated with any trading partner.
- Ongoing Negotiation: members agree to periodic multilateral negotiations on tariff reductions.
The GATT reduced tariff through successive rounds of multilateral trade negotiations (eg. Kennedy Round 1963-1967; Tokyo Round 1974-1979; Uruguay Round 1986-1993).