It is only once we take into account our surroundings can we fully appreciate the true impact of globalisation and the effect it has on our day-to-day lives. The clothes we wear, the laptops we use, and the chairs we sit on, are just a few simple examples of items that have been made available to us as a result of the continued integration of the world’s markets. However, as global markets continue to integrate, further compounded by tough economic conditions in an intense and competitive marketplace, the need to protect domestic production is deemed to be vital to a country’s economic success. As a result of this self-preservation causes political conflict and strains international relations. To remove the possibility of such discrimination from taking place, the GATT and the WTO have been put in place to insure that the 156 members adhere to the various principles within the two agreements.
Articles I and III of the GATT outline two of the most fundamental principles regarding non-discrimination in WTO law; the most-favoured-nation (MFN) treatment obligation and the national treatment obligation (NTO). * The MFN treatment obligation, which is set out in Article I of the GATT, is described in the case of EC- Tariff Preferences as the ‘cornerstone of the GATT’ and ‘one of the pillars of the WTO trading system’ Its principle purpose is to ensure that WTO members have equal opportunities to import and export goods and services with other members.
The MFN treatment obligation is applied using a three-tier test of consistency under Article I:1. The test examines whether any unfair advantage exists between ‘like products’ and whether such an advantage is granted ‘ immediately and unconditionally’ to all ‘like products’ concerned. Such advantages include measures such as customs duties and internal taxes. Article I:1 also takes into account de facto as well as de jure discrimination as seen in the case of Canada-Autos. The scope of Article I:1 is relatively broad but it does have it’s limitations. Under WTO law, there are still on-going debates as to the exact terminology of words such as ‘likeness’ and ‘unconditionally’. The current case-by-case basis approach the WTO take is probably the most effective method of counter-acting potential foul play by member nations. Article I plays a critical part of WTO law and should it crystalize its interpretation of such wording, the ramifications in terms of discriminatory action could result in political backlash. For these reasons alone, it is clear why Article I is deemed to be the cornerstone of the GATT.
However despite having a pivotal role in international trade, the significance of the MFN treatment obligation appears to be diminishing due to a recent surge in preferential trade agreements between Members. By July 2005, a total of 330 of these regional trade agreements had been notified to the WTO highlighting the fact that the principle now carries less weight when it comes to trade than it had done in previous years. The 2004 Sutherland report on the future of the WTO concluded that MFN is no longer the rule, but that it is almost becoming the “exception”.
Article III of the GATT outlines the National Treatment Obligation (NTO) principle. The purpose of NTO is to ensure that internal measures are not applied to imported products so as to afford protection to domestic production which is stated in article III:1. The scope of the NTO extends beyond preventing discriminatory measures being placed on imports as it also aims to eradicate potential ‘hidden’ domestic barriers to trade by WTO members that may appear legitimate at first instance. Akin to Article I, it also takes into account de facto discrimination.
Article III:4 ensures that imported goods and services which are ‘directly competitive or substitutable‘ to domestic products, are subject to the same quality standards as was seen in the case of Argentina- Hides and leather. This...