World Trade Organization Principles

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1. Without Discrimination:
There are two main elements to this principle – Most Favoured Nation (MFN) Treatment and National Treatment. MFN Treatment is a World Trade Organisation (WTO) agreement which states that during trade, countries are not permitted to discriminate between their partners i.e. special or preferential treatment cannot be given to another WTO member country. The MFN Treatment principle is a central element used in drawing up the GATT, GATS, and TRIPS agreements, and combined, cover all areas of trade documented by the WTO. There are exceptions to the MFN Treatment principle however, as free trade agreements can be set up between nations, which discriminate against outside goods. The North American Free Trade Agreement (NAFTA) is an example of a free trade agreement between nations, whereby Mexico, Canada, and the U.S. allow free trade between their countries, without restrictions or tariffs. An exception such as this will only be tolerable under very stringent conditions, as all partners must be treated equally. The principle of National Treatment states that once an imported good or service enters a domestic market, then both the domestic good or service, and the imported good or service must be treated equally. Furthermore, this principle can be seen in all three main WTO agreements, as with the MFN Treatment principle, and both combine to form the “Without Discrimination” WTO principle. 2. Freer:

The second fundamental principle on which the WTO is based is the strive for a freer trading system. Fewer quantity of barriers to trade will help to promote a more vibrant and rich trading system. There is currently still a plethora of barriers which restrict trade throughout certain parts of the world including custom tariffs, import bans or restrictive quotas. In some countries, overly abundant amounts of “red tape” intensify complications in possible trade agreements, therefore discouraging others from conducting business with them. Exchange rate policies are also an extremely prevalent issue at the moment due to the current state of the worldwide economy and the unstable nature of many of the world’s currencies. These barriers and issues have been tackled head on by the General Agreement on Tariffs and Trade (GATT) since its inception in 1948, and is currently in the midst of the Doha Development Agenda, its ninth round of negotiations since it was signed into agreement. These rounds of negotiations have primarily focused on reducing tariffs which affect the importing of goods into different countries. The GATT has proved hugely successful, and by the 1980’s negotiations had expanded to include custom duties imposed on services as well as intellectual properties. A recent example of the benefits of having freer trading system possibilities is the deal that was struck in 2010 between China and the members of the Association of Southeast Asian Nations (ASEAN). This relatively new free trade area has seen a sharp rise in trade and investment as ties between the nations strengthen and relationships grow. The benefits to the economies of the participating nations are plentiful and this particular free trade agreement has become a shining example to all developing countries. 3. Predictable:

The principle of predictability is a concept which is of particular importance to governments when deciding on what action to take in relation to future trading. Predictability can be achieved through measures known as binding and transparency. Binding simply means that when a country opens its market to allow in foreign goods, they have a “binding” agreement on the tariffs imposed on the incoming goods. However, in certain circumstances, such as when a developed country is dealing with a developing country, the developed country will lower the tariff rate on the developing countries’ incoming products. Bindings can be changed, but only if all trading partners are agreeable to the change. An example of a...
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