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How did the General Agreement on Tariffs and Trade become the main system governing global trade before 1995?
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World Trade Organization
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The General Agreement on Tariffs and Trade (GATT) became the primary system governing global trade by default rather than by initial design. Concluded in 1947, it was originally intended as a provisional arrangement pending the formation of a formal United Nations agency, the International Trade Organization (ITO). When the United States failed to ratify the ITO’s charter, the provisional GATT remained the only major agreement regulating international trade.12
Over the next 47 years, GATT evolved into a de facto global trade organization through several key mechanisms:
- Negotiating Rounds: Through seven major multilateral conferences, such as the Kennedy Round and the Uruguay Round, GATT was systematically expanded and modified.12
- Code of Conduct: It established fundamental principles, most notably trade without discrimination via most-favoured-nation clauses and a preference for tariffs over quotas.1
- Institutional Growth: The system grew through supplementary codes, interpretations, and dispute-settlement panel reports, eventually governing 90 percent of world trade by 1995.12