Several individuals become confused between the presently defunct GATT and WTO and cease to recognise the difference. GATT is an acronym for General Agreement on Tariffs and Trade. The GATT was established in 1948 and later replaced by the WTO acronym for World Trade Organization. We can recognise the difference when focusing on the different procedures, formats, emphasis, and scope of the two institutions. This article will clarify the primary differences between GATT and WTO.
What is GATT?
GATT, also known as the General Agreement on Tariffs and Trade, was established in 1948 to strengthen international trade by decreasing trade obstacles between nations through negotiations. It was later replaced by WTO, known as Word Trade Organization, in 1995. This occurred after prolonged considerations that went on for eight years in GATT. GATT was under ITO, known as the International Trade Organization, which functioned under the auspices of the United Nations. Although, International Trade Organization got sidelined as the United States declined to authorise it, which is why GATT changed to a new institution known as WTO. The final band of GATT was hosted in Uruguay in 1993 until it was modified into World Trade Organization. Though there were guidelines in GATT for the nullification of conflicts, it did not possess any enforcement strength to result in several disputes. When compared to GATT, the World Trade Organisation is extremely powerful.
What is WTO?
WTO means world trade organisation. General Agreement on Tariffs and Trade was superseded by World Trade Organization in 1995. The World Trade Organization consists of 125 members and acquires more than 90 per cent of total International trade overseen by the guidelines of the World Trade Organization. The most significant difference between these two is the installation of a conflict settlement agency with the strength to inflict trade embargoes against erring members. World Trade Organization possesses substantial requirements for enforcement of the guidelines. If a member nation is aggrieved, it can protest with the World Trade Organization to ensure that the offender complies with the requirements of the World Trade Organization. World Trade Organization can also inflict trade embargoes against erring members as a final alternative. The fact that General Agreement on Tariffs and Trade, which began with just 23 members in 1948, was instrumental in connecting more than 100 extra members until World Trade Organization superseded it is a consideration of the effectiveness of the institutions. This points out that an obvious difference exists between the two institutional bodies.
Difference Between GATT and WTO
- GATT is an acronym for General Agreement on Tariffs and Trade, while WTO is the acronym for World Trade Organization.
- GATT possessed a temporary legal consensus. WTO has legally endless requirements.
- The member nations of GATT are contracting parties, while they are real members of the World Trade Organization.
- GATT was restricted to trade in goods alone. But the breadth of the World Trade Organization is wider with services and genius property rights also contained.
- GATT was vulnerable and ineffective, while World Trade Organization is more powerful.
- GATT allowed for a domestic decree, while World Trade Organisations abolished this ruling.