GATT and the Rounds of Tariff Cutting

The postwar planners intended a third institution, an International Trade Organization, but its Havana Charter of 1948 was never ratified by the US Congress. Instead, the General Agreement on Tariffs and Trade, signed by 23 countries in Geneva in October 1947 as a stopgap, became the world's trade framework for nearly fifty years. Its core principles were most-favored-nation treatment, meaning a tariff cut granted to one member must be extended to all, and national treatment, meaning imported goods must not face discrimination once inside a country.

Members negotiated in 'rounds', such as the Kennedy Round of the 1960s and the Tokyo Round of the 1970s, steadily reducing tariffs on manufactured goods. Agriculture and textiles were largely left out, which developing countries saw as unfair because those were the goods they could export. By the 1980s GATT's limits, including weak dispute settlement and no coverage of services or intellectual property, spurred calls for reform.