tax ACADEMY
Konnectplus

KENYA

Customs Duty in Kenya





Chapter 2

The World Trade Organisation (WTO) & the General Agreement on Tariffs and Trade (GATT)

It is hardly possible to discuss international customs law without discussing the World Trade Organisation (WTO) and the General Agreement on Tariffs and Trade (GATT)

  • The period between World War I and World War II was characterised by extensive unilateral protectionism the world over. The 1930 Hawley-Smoot Tariff Act of the United States, increased average tariffs to 51%.

  • As the Great Depression set in, world trade at large collapsed together with many domestic economies, setting the stage on the way to World War II.

Consequently, in 1944 a multilateral conference was held in Bretton Woods, USA (hence the term ‘Bretton Woods system’) with an objective of developing a post-war multilateral system of international economic relations.


The Bretton Woods System

Its core mandate was to create three key international institutions, namely the

  • International Monetary Fund (IMF)

  • International Bank for Reconstruction and Development (World Bank) and

  • International Trade Organisation (ITO)


However, the ITO failed to come into existence due to opposition in the U.S. Congress. A multilateral treaty containing general principals of trade, GATT, had earlier been prepared and came into force in Jan 1948. GATT not only became effectively the centre of multilateral trade regulation, but also a defacto organisation until its replacement by the WTO in 1995.

  • In the period between 1947 and 1994 eight multilateral trade negotiations (MTNs) sessions or rounds were concluded by the GATT Contracting Parties mainly focused on the progressive reduction of tariffs (customs law) and the elimination of quantitative restrictions.

  • Observers increasingly realized that significant new agreements would require better institutional mechanisms and a better system for resolving disputes.

  • When the WTO Agreement entered into force (on 1 January 1995) the GATT 1947 and the WTO co-existed under the Decision on the Transition Co-existence of the GATT 1947 and the WTO Agreement.

  • On 1 January 1996, GATT 1947 was absorbed into the WTO system as GATT 1994




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