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Introduction Of Gatt And The Wto

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Trade prior to the introduction of GATT and the WTO had many shortfalls. There was an ongoing disgruntlement between countries that were developed and countries that were not, and their ability to trade with each other. In order to remedy this, the GATT was introduced. After the GATT had its run, the WTO was created to replace and improve off of what was previously in place. That being said, the WTO, too, had its tribulations. Before the World Trade Organization was created, in-developed countries could not easily trade with developed countries. In fact, the United States and other countries paid subsidies to countries such as India to not produce things such as grain and fertilizer. As a developing nation, India did not take lightly to being pushed around. In 1962, in an effort to stabilize ties with India, President John F. Kennedy traveled there and proclaimed India’s currency, the Rupee, would have Purchasing Power Parity with the American Dollar. Purchasing Power parity means that the Rupee and the American Dollar are related by a specific ratio. For example a dozen eggs costs one American Dollar, the exchange rate between the US and India is 1:1.5, so that means that one dozen eggs will cost three Rupees. In the event that the dozen eggs now costs five American Dollars, it would then cost seven and one half Rupees. The goal of this was to raise the power of the Rupee to match that of the Dollar. In 1947 the GATT was signed into agreement by the 23 participating

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