The Origins of the General Agreement on Trade and Tariffs

Essay from the year 2015 in the subject Business economics - Trade and Distribution, grade: 100/100, , language: English, abstract: For a long period of time people and countries have recognized the importance of international trade and its influence on their welfare. In general terms, as Adam Smith concluded, international trade enables the specialization of nations in the production of goods and services that they can produce more efficiently and at the same time it allows the enjoyment of products that foreign countries have comparative advantages in. However, in specific periods, mainly due to economic ignorance and circumstances of financial uncertainty, countries have tried to protect their economic space by imposing trade restrictions. The consequence of such an action has been the deterioration of the economic environment and the persistence of severe crises. It was exactly the end of the Second World War that directed the economic philosophies of the major players in world trade towards the common idea that trade barriers should be eliminated if countries want to expand their economic potential. As a result, their willingness to create a mutual economic environment that would produce shared financial benefits for all the members led to the creation of the General Agreement on Trade and Tariffs in 1947 in Geneva, Switzerland. The General Agreement on Trade and Tariffs was a contractual framework, a temporary agreement which priority was the reduction of trade barriers between the participating countries.