GATT Priciples in International Economics Essay Example | Topics and Well Written Essays - 750 words

GATT Priciples in International Economics - Essay Example The General Agreement on Trade and Tariff (GATT) is a voluntary agreement to give tariff concessions and reduce restriction on imports among 135 countries of the world (Blirtit). The agreement was formulated within the jurisdiction and framework of the World Trade Organization (WTO). There are four basic principles covered by GATT. These are: (1) discrimination is prohibited in trade relations, (2) Tariffs instead of trade barriers should be utilized by countries to protect themselves from foreign competition, (3) all member nation must promote the trading interest of each country, (4) negotiations between concerting terms of trade must follow the GATT framework (Blirtit). These principles have a positive influence in international trade. Discriminatory practices against a particular country hurt the balance of trade among nations. For example if the US discriminated against Argentina’s agricultural products it would hurt the internal economy of this nation which subsequently affects the purchasing power of Argentina and the amount of trade activity with other nations. An example of a discriminatory trade practice that can hurt a local economy of a GATT member nation is dumping. Dumping occurs when one country exports a significant amount of goods to another country at prices much lower than the domestic marketplace (Anwers, 2009). The anti-discriminatory clauses with the GATT principles provide a safeguard that protects the integrity of trade relations in the international economy. Tariffs are am instruments which creates a tax imposition on imports that raise the price and can be used to manipulate the demand specific goods and service imports. The good thing about this economic tool is that it provides consistency as far as creating a simple mechanism that can be utilized by any country to protect local industries. The GATT principles stipulate that tariffs should be the universal