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How did lower tariffs contribute to the growth of world trade after 1950?
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World Trade Organization
Workers sewing clothing in a garment factory in Ho Chi Minh City in April, 2025.
After 1950, the dramatic growth of international tradeâwhich increased 22-fold by the year 2000âwas driven significantly by the systematic reduction of tariffs and trade barriers.1
This expansion was primarily facilitated by the General Agreement on Tariffs and Trade (GATT), established in 1948. GATT served as an effective instrument for trade liberalization by encouraging multilateral negotiations to lower duties. Key principles included:12
- Non-discrimination: Through "most-favoured-nation" clauses, tariff reductions agreed upon by major trading partners were automatically extended to all member nations.2
- Transparency and Stability: GATT replaced unpredictable import quotas with transparent tariff-based protection, creating a predictable code of conduct for global commerce.2
- Successive Negotiations: Periodic conferences, such as the Kennedy, Tokyo, and Uruguay Rounds, successfully reduced average tariffs on industrial goods from 40 percent in 1947 to less than 5 percent by 1993.2
In 1995, the World Trade Organization (WTO) succeeded GATT, continuing these efforts to foster open, fair, and transparent trade, which proponents credit with improving economic efficiency and lowering consumer costs.12