The Bretton Woods Conference of 1944 recognized the need for a comparable international institution for trade (the later proposed
International Trade Organization (
ITO)) to complement the
International Monetary FundThe International Monetary Fund is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments...
and the
World BankThe World Bank is an international financial institution that provides leveraged loans to poorer countries for capital programs, tied to neoliberal market restructurings...
. Probably because Bretton Woods was attended only by representatives of finance ministries and not by representatives of trade ministries, an agreement covering trade was not negotiated there.
In early December 1945, the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
invited its war-time allies to enter into negotiations to conclude a multilateral agreement for the reciprocal reduction of tariffs on trade in goods.
The Bretton Woods Conference of 1944 recognized the need for a comparable international institution for trade (the later proposed
International Trade Organization (
ITO)) to complement the
International Monetary FundThe International Monetary Fund is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments...
and the
World BankThe World Bank is an international financial institution that provides leveraged loans to poorer countries for capital programs, tied to neoliberal market restructurings...
. Probably because Bretton Woods was attended only by representatives of finance ministries and not by representatives of trade ministries, an agreement covering trade was not negotiated there.
In early December 1945, the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
invited its war-time allies to enter into negotiations to conclude a multilateral agreement for the reciprocal reduction of tariffs on trade in goods. In July 1945 the
United States CongressThe United States Congress is the bicameral legislature of the federal government of the United States of America, consisting of two houses, the Senate and the House of Representatives. Both senators and representatives are chosen through direct election....
had granted President
Harry S. TrumanHarry S. Truman was the 33rd President of the United States . As President Franklin D. Roosevelt's third vice-president and the 34th Vice President of the United States, he succeeded to the presidency on April 12, 1945, when President Roosevelt died less than three months after beginning his...
the authority to negotiate and conclude such an agreement. At the proposal of the United States, the
United Nations Economic and Social CommitteeThe Economic and Social Council of the United Nations is a group of UN member countries that assists the General Assembly in promoting international economic and social cooperation and development. ECOSOC has 54 members, all of whom are elected by the General Assembly for a three-year term...
adopted a
resolutionA resolution is a written motion adopted by a deliberative body. The substance of the resolution can be anything that can normally be proposed as a motion. For long or important motions, though, it is often better to have them written out so that discussion is easier or so that it can be...
, in February 1946, calling for a conference to draft a charter for an International Trade Organization (ITO). A Preparatory Committee was established in February 1946, and met for the first time in London in October 1946 to work on the charter of an international organization for trade; the work was continued from April to November 1947. At the same time, the negotiations on the
General Agreement on Tariffs and TradeThe General Agreement on Tariffs and Trade was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was formed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995...
(GATT) in Geneva advanced well and by October 1947 an agreement was reached: on October 30, 1947 eight of the twenty-three countries that had negotiated the GATT signed the "Protocol of Provisional Application of the General Agreement on Tariffs and Trade".
In March 1948, the negotiations on the ITO Charter were successfully completed in
HavanaHavana Charter was the charter of the defunct International Trade Organization . It was signed by 53 countries on March 24, 1948. It allowed for international cooperation and rules against anti-competitive business practices. The charter ultimately failed because the Congress of the United States...
. The Charter provided for the establishment of the ITO, and set out the basic rules for international trade and other international economic matters. The ITO Charter, however, never entered into force; while repeatedly submitted to the US Congress, it was never approved. The most usual argument against the new organization was that it would be involved into internal economic issues. On December 6, 1950 President Truman announced that he would no longer seek Congressional approval of the ITO Charter. In the absence of an international organization for trade, countries turned, from the early fifties, to the only existing multilateral international institution for trade, the "GATT 1947" to handle problems concerning their trade relations. Therefore, the GATT would over the years "transform itself" into a
de factoDe facto is a Latin expression that means "by [the] fact". In law, it is meant to mean "in practice but not necessarily ordained by law" or "in practice or actuality, but without being officially established"...
international organization. It was contemplated that the GATT would be applied for several years until the ITO came into force. However, since the ITO was never brought into being, the GATT gradually became the focus for international governmental cooperation on trade matters
Seven rounds of negotiations occurred under GATT before the eighth round - the
Uruguay RoundThe Uruguay Round was the 8th round of multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 110 countries as “contracting parties”...
- concluded in 1994 with the establishment of the World Trade Organisation (WTO) as the GATT's replacement. The GATT principles and agreements were adopted by the WTO, which was charged with administering and extending them.
See also
- General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was formed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995...
- United Nations Monetary and Financial Conference
The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the...