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General Agreement on Tariffs and Trade (GATT)

International trade organisation, lasting from 1947 to 1994, created to dismantle the protectionism built up by nations in the decades between the first two world wars. Replaced in 1994 by the WTO.

The foundation of the post-WWII capitalist world was laid in a quite New Hampshire town on July 1944. Gathering under the auspices of the United Nations Monetary and Financial Conference, Ministers from the Allied Nations, apart from the Soviet Union, set out to revive and maintain their economic system over as much of the world they could. They created three successful institutions to accomplish their aims: the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), also called the World Bank, and the General Agreement on Tariffs and Trade (GATT).

With the European economy in tatters by the utter destruction caused by the war, the unscathed United States was the only nation able to rescue capitalism once the War was over. Before the War, almost every country in the world had erected trade barriers to protect their own economies from the devastating crisis sweeping across the world in the wake of the Wall Street Crash. These protectionist measures had contributed to the Great Depression, making export of goods to other countries just as impossible as producing for non-existent domestic markets. There was no chance of rebuilding the war-shattered capitalist economy unless international trade could be re-created.

GATT was established to break down trade barriers (in the form of tariffs, quotas, preferential trade agreements between countries, etc) to make the flow of commodities and capital less restricted by national government influence. GATT explained how the new order would function with three principles for negotiating trade agreements: reciprocity, non-discrimination, and national security.

Reciprocity is the principle that nations should offer an equivalent exchange for the benefits they gain. In practice however, reciprocity is meaningless unless the negotiating nations have, in fact, equal or near equal economic relationships. For example, the U.S. exports food to Somalia, but Somalia exports very little to the U.S. Thus, Somalia is obliged to lower tariffs on U.S. food imports, but the U.S. can offer little benefits to Somalia in return. The end result is that wealthy, productive nations have a great deal to gain with foreign markets lowering tariffs, while poor nations have little to gain when the markets of the wealthy are already dominated by local producers, while their own markets at home are flooded by the wealthy nations. This makes it impossible to build up their own industries since they have no opportunity to compete with the imported goods.

The second principle of GATT, called "non-discrimination", was intended to protect against the corruption that would come about if there were a myriad of different tariffs applying to commodities that come from different countries. Multi-lateral trade agreements were thus necessary for the exchange of particular commodities. In liberal-speak, "non-discrimination" means that once a member reduced a tariff on some commodity for any country, that reduction applied to all member countries. Poor nations were again shafted – multi-lateral trade concessions made between western nations to lower tariffs on automobiles for example, made little impact in most South American nations. Tariffs in the West remained high for textiles, tropical fruit, etc, because it wasn't advantagous to the West to lower these tariffs. The markets of Western nations are more lucrative than those of poor nations; therefore lowering tariffs into western markets is a very big concession, while lowering tariffs into Southern nations is much smaller by comparison. Thus "non-discrimination" in practice applied primarily to the West – they strive to not "discriminate" among one another, but for the most part the rest of the world is not included.

Further still, GATT established a series of exceptions to reciprocity and non-discrimination. Maintaining national security means many things. In Article 1, paragraph 2, it means that the U.S., British, and others, re-established their old imperial preferences in colonies; while Article 14 explains that non-tariff barriers that discriminate between nations can be erected. Article 19 makes it clear that if the lowering of any tariff proved to be too harmful for national businesses, it could be rescinded. Article 21 states that "Nothing in this Agreement shall be construed ..." to negatively impact what any nation defines as a risk to it's own "security". Further, in Article 24, allowances are made specifically against "non-discrimination" – i.e. the establishment of regional trade alliances that exclude other member nations (i.e. the European Union, FTAA, ASEAN, etc.). By Article 25, GATT explains that two negotiating nations can use a two-thirds vote between them to "waive an obligation imposed upon a contracting party by this Agreement".

With the legalistic foundations laid for an international trading agreement, the next task to be resolved was who would facilitate this new trading order? Enter the IMF and World Bank [links to definitions pending their completion].

Historical Development: Originally GATT was set up as a temporary body to facilitate trade negotiations. The International Trade Organisation (ITO) had instead been created to break down trade barriers, govern trade during negotiations, and resolve trade disputes. The ITO Charter, adopted at the United Nations Conference on Trade and Development (UNCTE) in 1948, included (among other "leftist" principles) a provision that all nations should maintain full employment. This provision outraged the U.S. and U.K.; both calling it socialistic and a violation of national sovereignty. In 1950, the U.S. government refused to ratify the agreement, and the ITO died.

Instead, the U.S. supported GATT in an expanded role. In the GATT agreement of 1947, 23 nations had signed on; by 1949 10 more nations agreed to comply; all together claiming they governed four-fifths of global trade.

While GATT members negotiated separately on numerous occasions, the entire group held eight organized rounds of trade negotiations. At the first round in Geneva (1947), tariffs were cut by 20% on around three-fourths of commodity imports In the four rounds that followed: Annecy (1949), Torquay (1950-51), Geneva (1955-56) and (1960-61), tariff cuts never amounted to more than 3%, covering less than a tenth of commodity imports. Those controlling GATT thus resolved a new approach: across the board cuts in tariffs, with exception negotiations to follow. The last three rounds of GATT, very much extended, did exactly this: the "Kennedy Round" (1962-67), the Tokyo Round (1973-79), and the Uruguay Round (1986-94).

The last round of GATT negotiations, the Uruguay Round, marked the end of GATT, and the beginning of a new corporate era: the WTO. 128 nations were signatories at it's creation in 1994.

Further Reading: The Full text of GATT, as created and ammended from 1947 to 1966.

German Confederation

Formed by the Vienna Congress on June 8, 1815. The Confederation was an association of feudal-absolutist German states; it helped to prolong the political and economic disunity of Germany.

German Social-Democratic Labour Party

A Socialist party formed at a Congress of Social-Democrats from Germany, Austria, and Switzerland, held in Eisenach between August 7 and 9, 1869, where they became known as the Eisenachers. The party was led by August Bebel and Wilhelm Liebknecht. The programme adopted at the Congress primarily corresponded to the principles advanced by the First International.

In May 1875 (at the Gotha Congress) the party united with the General German Workers' Union to form the Socialist Worker's Party of Germany. The draft programme of the united party came under intense critism from Marx and Engels. (See Critique of the Gotha Programme)

During WWI the German Social-Democratic Party took a social-chauvinist stand, vigourously supporting the war. The Marxists immediately split from the party and formed the Spartacists; tirelessly fighting the German war machine.

German Workers' Society

Founded by Marx and Engels in Brussels at the end of August 1847, it became the legal rallying centre for German revolutionary workers in Belgium. Some of the members were also members in the Brussels branch of the Communist League. Soon after the French revolution of 1848, the members of the society were arrested and deported by the Belgian police.