The great depression was a severe worldwide economic depression that took place
during the 1930s. The depression originated in the United States, after a major
fall in the stock prices than began around 4, Sep 1929 and became worldwide news
with the stock market clash of 29,oct,1929 which is known as the black Tuesday.
Between 1929 and 1932, worldwide GDP fell by an estimated 15% (by comparison
worldwide GDP fell by less than 1% from 2008 to 2009 during the great recession.
During great recession more than 10,000 banks failed and it took the life
savings of 9 million peoples. The outstanding debt became heavier, because price
and income fell by 20-50% but the debt remains at the same dollar amount.
Due to the great depression in U.S and other western nations decided to adopt
protectionist policies with high import tariffs.
Smoot Hawley tariff act of 1930 were made and tariffs under the act were the
second highest in the U.S in 100 years exceeded by the small margin by the
tariffs of 1828.
Breton woods conference formally known as the United Nations monetary and
financial conference, the gathering of 730 delegates from all 44 allied nations
at the Mount Washington hotel, situated in Breton wood, U.S in order to regulate
the international monetary and financial orders after the conclusion of World
The conference was held from July 1-22 in 1944, agreement were signed that after
litigations ratifications by member government est. the IBRD, IMF, GATT.
General Agreement on tariff and trade was Establish In the year 1948, and
signed by 23 nations in Geneva on October, 30, 1947 and took effort on 1st Jan
1948. GATT was a legal agreement between many countries, whose overall purpose
was to promote international trade by reducing or eliminating trade barriers
such as tariffs. Its primary objective was to expand international trade by
liberalizing so as to bring about all round economic prosperity and developing
full use of resources of the world.
W.T.O was officially commenced on 1 Jan 1995 under the Marrakesh agreement
signed by 123 nations on 15th April 1994, replacing the general agreement on
tariff and trade, headquarter of W.T.O is in Geneva, Switzerland. The official
languages are English, French, and Spanish.
GATT was working very effectively but powerful members of GATT decided to
replace it with some global level regulating and governing authority. This
happened for various reasons as GATT was applicable only on trading of
merchandised goods but WTO covers treading of services and intellectual property
along with merchandised goods.
GATT was highly bureaucratic structure, on the other hand WTO is faster in
implementation of international agreement and WTO enjoys more authority wile
resolving the disputes between member countries. GATT was actually just a set of
instructions and rules with non organizational and institution foundation; there
was no central body to regulate the functioning of GATT and its member
On the other hand WTO is permanent full fledge international institution with
its own independent secretariat. Moreover GATT agreement was subject to the
willingness of members countries to implement it. As it was quite possible that
one or more members countries refused to implement the signed agreement simply
due to various miscellaneous local reason and no one was there to account their
responsibility of implementation but commitment of WTO are permanent and
Principles of W.T.O
The WTO has two major components of the most favoured nations and the national
The most favoured nation principle required that W.T.O members must apply the
same conditions on all trade with other members, all the member countries has to
follow it and a member country of WTO cannot discriminate another country in
relation to a trade.
National treatment principle:
- The most favoured nation principle does not apply when a country goes
for a professional trade agreement with another country or with the group of
countries so MFN does not apply.
- Developing or least developing countries is given special market access
and duty free and quota free market in order to boost their development.
- In special circumstances if a country feels that imported items are
unfairly traded items so MFN principle will not apply on it.
It says that democratically produced goods and
imported foreign goods or domestic services and imported or foreign services
should be treated equally in a same manner and this principle applies when
foreign goods reached Indian market, not before that.
Written by: Saksham Ahlawat
- B.A.LL.B (hons) Chandigarh University,