Explanation

The World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade (GATT) on January 1, 1995. General Agreement on Tariffs and Trade (GATT) was an international trade agreement signed in 1947. 23 nations were signatories of this trade agreement. GATT came into effect on January 1, 1948. The purpose of GATT was to liberalise trade by reducing tariffs and reducing quotas among member countries. The member nations had to remove all the trade discriminations. The 7 rounds of negotiations from 1947 to 1993 reduced average tariffs on industrial goods from 40% to 5%. The steps taken at GATT led to economic globalization. GATT was replaced by WTO in 1995. Uruguay round of GATT negotiations started in September 1986, and it concluded on 15 April 1994 after nearly 8 years of negotiations. This culminated in the formation of the World Trade Organisation (WTO).