Which of the following was the main reason for the formation of General Agreement for Tariffs and Trade (GATT)?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → To reduce tariffs and various other types of restrictions
Option (1) To reduce tariffs and various other types of restrictions — Correct. GATT was formed by some countries in 1948 to liberalise the world from high customs tariffs and various other types of restrictions. A tariff is a tax on goods that cross a border: a high tariff makes imported goods dearer, so less is bought and sold between countries. Bringing tariffs and other restrictions down makes goods cheaper to move across borders, so world trade grows. In 1995 GATT became the World Trade Organisation.
Option (2) To increase tariffs — Incorrect. Higher tariffs would shrink trade, the opposite of GATT’s aim.
Option (3) To support developed countries — Incorrect. GATT freed trade among all its members, not one group.
Option (4) To impose new taxes on developing countries — Incorrect. A new tax on trade is a barrier, which GATT set out to remove.
NCERT (2025-26): “World Trade Organisation … In1948, to liberalise the world from high customs tariffs and various other types of restrictions, General Agreement for Tariffs and Trade (GATT) was formed by some countries. In 1994, it was decided by the member countries to set up a permanent institution for looking after the promotion of free and fair trade amongst nation and the GATT was transformed into the World Trade Organisation from 1st January 1995. WTO is the only international organisation dealing with the global rules of trade between nations.…” |