World Trade Organization

After World War II economists and governmental officials from many of the Allied countries believed that national protection of industries and agriculture was, in the long run, inefficient and harmful to the economies of all nations. They believed that international trade should be based on comparative advantage, permitting each nation to produce what it can do best. They also believed that the best way to revive the world’s economy in the postwar period would be to increase international trade, and the best way to do so was to decrease tariffs. These views led to the General Agreement on Tariffs and Trade (GATT), a provisional agreement made by contracting parties in 1947 to lower tariffs and increase international trade. GATT had no enforcement mechanism, but it did propose the creation of an International Trade Organization (ITO) that would have enforcement powers.