The General Agreement On Tariffs And Trade Economics Essay

“The General Agreement on Tariffs and trade was negotiated during the UN conference on trade and employment and was outcome of the failure of negotiating governments to create the International trade organization.” This organization was created in 1949 and run until 1993 then it was taken place by the WTO (World Trade Organization) in 1995. The GATT is working under the World trade organization. They created some rules and regulation for exporting and importing goods to and from the country. It means any organization who wants to imports the goods they have to follow the GATT regulations. They have some strict rules and regulation for the firms who wants to import or exports the goods. Government will create some agreement for the companies to imports or exports the goods. But if the agreement is not exists then they will create the some tariffs on the basis on which the firm will able to imports the goods. The GATT will create some protective measures as well so that the firm will safe and secure in the market. On the basis of tariffs the firm will able to negotiate and they will accept the tariff and then they are able to imports or exports the goods. It is the institute which is working in the country and take the protective measures on which the products are imports and exports. They are working in the favour of the country because if any firm has the right to imports or exports the unlimited goods then they do that way and earn the most of the profit by doing that thing. Because every country has its own currency and currency is exchanged so the other country has its benefits so the firm has to work on it and take the protective measures on it. GATT is taking over by the WTO which is the world trade organization and now the GATT is the part of it so they both are working at the same stage and in the favour of the country and take the protective measures in the goods imports and exports. They set some quality standard as well at which goods are imports and exports in the market. They have some import quotas which follow by the firms in the country. The countries are agreed to lower their tariff rate and increase the quality of the goods. As time passes the trade would have the lower rate and flows are increased. For examples U.S. is imports the agricultural products from other countries in 2002. They provide the higher prices to the domestic producers they are not permitted them to imports the products to the other countries. This is done due to the U.S. is the exporter of the many agricultural commodities. So they did the some kind of restriction on the local authorities on the exporting things to the outside world. It is done through the tariff techniques. U.S. Government have the strong position in the World trade organization, so they done the things which is useful for them in their country benefits.

Analysis:-

Every country has its own protection on the imports and exports criteria. They have the some amount fixed on the imports and exports so other countries follow that regulations when they want to imports or exports the goods. If they cross the limit which is set by the organization WTO then they have to pay some extra tax or the have been barred to imports or exports on the other occasions. Every country protect their domestic suppliers because if there is too many goods come from outside then the country which is having that much goods have the problems so they have to protect the import and export criteria. This is achieved through the tariff and non-tariff techniques. This is always important for any organization to follow these techniques. They provide the higher prices to the domestic producers they are not permitted them to imports the products to the other countries. This is done due to the U.S. is the exporter of the many agricultural commodities. So they did the some kind of restriction on the local authorities on the exporting things to the outside world. It is done through the tariff techniques. In the U.S. the firms tried to eliminate the non tariff barriers because they want to trade in agricultural commodities and replace it with the tariff which is called the tarrification. (Jeffrey J, et al., May 2007) This tarrification is largely achieved and viewed in 1994 which is very successful. The other way to avoid the imports is the import licence which is proved to be effective. If this licence is not hold by the country then they simply restrict the import of the product. Before the North American free trade agreement for example if Mexico want some agricultural commodities than they have to hold the licence otherwise they restrict for imports the goods. Some countries have the other techniques as well like they used the currency exchange rate to discourage the imports and encourage the exports which is the good idea for any country. By doing this if the country has the lower currency exchange rate compare to other then the other countries can not export the goods to that country. But this situation is good for the own country and their suppliers who want to exports the goods. In this way the firm will decide whether or not they want to go for which technique. This is very important techniques in the market. These techniques are useful for any country who wants to grow in the market. Any country who wants to grow they have to restrict their imports not all but some of the imports because if thing which produce in own country then they have to increase the production of that product so they do not have to import the goods from outside and exports as many thing as much as possible which is important for the country. In this way the country will grow their currency and make profit in the market and the firm will be come on top as a result of it.

Recommendation:-

I recommend that the every country should follow the GATT because it is the important aspects for the country’s growth. Like America every country makes some changes to their importing goods in the country. They have some strict measures on the imports so that outside companies not earn to much money from the country and the other country will grow. So the every firm has to make some adjustments to their GATT policies. Every country has to increase the taxes on the goods coming from the other countries and restrict on the quantities in which they are coming. This is important because if the country not makes some strict measures than the outside firm will send too much goods and the goods will store in the warehouse. By doing this firm will think twice before sending goods to the country because they have to pay more tax on the things which will send extra. Some countries have the other techniques as well like they used the currency exchange rate to discourage the imports and encourage the exports which is the good idea for any country. By doing this if the country has the lower currency exchange rate compare to other then the other countries can not export the goods to that country. But this situation is good for the own country and their suppliers who want to exports the goods. In this way this are the points I think which is important to change for every country who wants to increase their profits and secure their imports. This is some recommendation which is useful for the firm who want to secure their imports as well as to be competitive in the market.

Conclusion:-

The concept of General Agreement on Tariffs and Tax is important for every country. Some countries have the other techniques as well like they used the currency exchange rate to discourage the imports and encourage the exports which is the good idea for any country. By doing this if the country has the lower currency exchange rate compare to other then the other countries can not export the goods to that country. But this situation is good for the own country and their suppliers who want to exports the goods. This concept is important for every country that is growing or grown. If this concept is used effectively and efficiently then this is the very important concept and proper used of its concepts. Every little firm has its advantage and grown in the market. Because the countries are restricting the imports of the product; it is advantageous to the small firms in the market. Every little firm will grow in the market and make profit and able to survive in the competitive situation in the market. This concept of GATT gives every little firm to grow in the market and make their impact in the market.

References:-

Jaffrey J., et al., 2007, American Journal of Agricultural Economics, 89(2), pp. 383-397.

Xuepeng Liu, 2009, Review of International Economics, 17(3), pp. 428-446.

Tomz, et al., 2007, American Economic Review, [e-journal], 97(5), abstract only. Available through: [Business Source Complete] [Accessed on 15th October, 2010]

Ajay Chudhry, 2002, GATT: a developing country perspective, Asian books, New Delhi.

Definition of GATT [online] Available At: <http://www.investorwords.com/2152/GATT.html> [Accessed on 13th October, 2010]

Tariff and non-tariff barriers to trade [online] Available At: < http://www.farmfoundation.org/news/articlefiles/816-sumner.pdf > [Accessed on 10th October, 2010]

Economic theory of GATT [online] Available At: < http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7HYPERLINK “http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7&hid=14&[email protected]“&HYPERLINK “http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7&hid=14&[email protected]“hid=14HYPERLINK “http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7&hid=14&[email protected]“&HYPERLINK “http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=7&hid=14&sid=59cd08a2-49c7-4d66-[email protected]“sid=59cd08a2-49c7-4d66-9287-0804dfc3c5ee%40sessionmgr13 > [Accessed on 11th October, 2010]