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General Agreement on Tariffs and Trade (GATT)

Definition

GATT is an international treaty signed in 1947 aimed at encouraging free trade by reducing tariffs and other trade barriers.

Analogy

Think of GATT as the rules for a neighborhood yard sale. Everyone agrees to price their items fairly so that everyone can buy what they need without any unfair advantages or restrictions.

Related terms

World Trade Organization (WTO): This is like the neighborhood association that oversees the yard sale, ensuring everyone follows the agreed-upon rules. WTO replaced GATT in 1995 but carries forward much of its work and principles.

Tariff: This is like a fee you might charge someone from outside your neighborhood to come into your yard sale. In international trade, it's a tax imposed on imported goods.

Non-tariff barriers to trade: These are like other ways you might try to discourage outsiders from coming to your yard sale - maybe by making it hard for them to park or find your house. In trade terms, these could be quotas, embargoes, sanctions, or other restrictions.