After the First World War
To understand the origins of the GATT, one must appreciate the traumatic events of the 1920s and 1930s. The period between World War I and World War II was a political and economic disaster, scarred by the Great Depression and the rise of fascism. A strong desire to avoid repeating this experience after World War II, along with the abandonment of isolationism by the United States in favor of a leadership role in world affairs, fostered support around the world for a new approach to international economic cooperation.
The outbreak of World War I in 1914 interrupted what had been a period of growing worldwide economic prosperity with moderate tariffs and expanding world trade supported by a well-functioning international monetary system (the gold standard). After the shock of World War I, the international trade and payments system recovered very slowly during the 1920s. Most countries only gradually phased out wartime controls on trade, while tariff levels remained higher than before the war. The United Kingdom did not return to the gold standard until 1925, and other countries waited even longer before restoring the convertibility of their currencies. Under the auspices of the League of Nations, the World Economic Conference of 1927 aimed to return the world economy to its previous state of vigor. But the Conference only started an international discussion of matters such as tariff levels, most-favored-nation clauses, customs valuation, and the like.