Scribd
Upload
46 views6 pages

WTO's Most-Favored Nation Rule

The document discusses the most-favored nation principle in international trade. It applies to goods, services, and intellectual property. Countries cannot discriminate between trading partners and must grant the same advantages to all WTO members. There are some exceptions like free trade agreements and special treatment for developing countries. The principle aims to prohibit discrimination and ensure equal opportunities for trade.

Uploaded by

K Geethika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
46 views6 pages

WTO's Most-Favored Nation Rule

The document discusses the most-favored nation principle in international trade. It applies to goods, services, and intellectual property. Countries cannot discriminate between trading partners and must grant the same advantages to all WTO members. There are some exceptions like free trade agreements and special treatment for developing countries. The principle aims to prohibit discrimination and ensure equal opportunities for trade.

Uploaded by

K Geethika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Most-Favored Nation

Principle
Meaning and Legal Provisions
• Meaning: Countries cannot discriminate between their trading partners. If you
grant a special favour to any country, you have to do the same for all other WTO
members.

• Art. 1 GATT: ‘Any advantage, favour, privilege or immunity granted by any


contracting party to any product originating in or destined for any other country
shall be accorded immediately and unconditionalyy to the like product originating
in or destined for the territories of all other contracting parties.’

• Art. 2 GATS:’Each member shall accord immediately and unconditionally to


services and service suppliers of any other Member treatment no less favourable
than that it accords to like services and service suppliers of any other country.’
• Art 4 TRIPS: ‘With regard to the protection of IP, any advantage, favour,
privilege or immunity granted by a member to the nationals of any other
country shall be accorded immediately and unconditionally to the nationals of
all other members, subject to certain exemptions.’

• Some exceptions:
1. Setting up a free trade agreement that applies only to goods traded within
the group- discriminating against goods from outside.
2. Give developing countries special access to their markets
3. A country can raise barriers against products that are considered to be
traded unfairly from specific countries.
MFN under GATT
• MFN principle of GATT forbids members from discriminating among
‘like products’ originating from other members, by imposing an equal
treatment by the members of GATT .

• Example: If Italy imposes a 10% tariff on German Cars, it cannot


impose a 20% tariff on French cars.

• Art. 1 of GATT also states that any trade advantages granted to one
member must be ‘unconditionally’ and ‘immediately’ offered to all
members of WTO.
• Canada-Autos case

• Purpose of MFN:
1. To prohibit discrimination between like products originating in or
destined for different countries.
2. To ensure equality of opportunity to import from or to export to all
WTO members.
• EC-Bananas III: Appellate body stated: The essence of non-discrimination
obligations is that like products should be treated equally, irrespective of their
origin. As no participant disputes that all bananas are like products, the non-
discrimination provisions apply to all imports of bananas, irrespective of
whether and how a Member categorizes or subdivides these imports for
administrative or other reasons.

• Thus, any member of WTO that gives a favorable treatment to another partner
is under the obligation to grant the same treatment to all Members of WTO.

• Else, it will be a violation of MFN principle.

You might also like