General Agreement on Tariffs and Trade (GATT)

Definition

GATT was a legal agreement between many countries whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

Analogy

Imagine GATT like a group project agreement in school where everyone agrees on how they'll share work equally so that no one person has an unfair advantage over others. Similarly, GATT aimed at creating equal opportunities for all participating nations in global trading.

Related terms

Protectionism: The theory or practice of shielding a country's domestic industries from foreign competition by taxing imports.

Tariff: A tax imposed on imported goods and services.

Non-Tariff Barriers (NTBs): Restrictions that result from prohibitions, conditions, or specific market requirements that make importation/exportation of products difficult and/or costly.