Non-discrimination is a Cornerstone of GATT Law Essay

Non-discrimination is a Cornerstone of GATT Law - Essay Example The most important trade principle was non-discrimination with regard to the treatment of trade in goods among countries. Article 1 of the GATT, states that any advantage given by a contracting party to a product of another country, must be extended unconditionally to a like product of all other contracting parties. The above article is the most favoured nation principle. A second rule of non-discrimination is national treatment, the principle that imported and domestic goods should be treated equally. Although non-discrimination is a cornerstone of the GATT, some exceptions are allowed. For example, custom unions, free-trade areas, and special treatment for developing countries are permitted. (Fergusson, 2007). Another principle is the open and fair application of any trade barriers. Tariffs were the most common and visible form of trade barrier at the time the GATT was established. (Fergusson, 2007). Tariffs are bound or set at maximum levels, and not to increase above the negotiated level. In general, quantitative restrictions such as quotas were not allowed, since tariffs were much easier to identify and to eventually reduce. The paper will focus on the most favoured principles and the national treatment principles. Studies and researches will be presented to evaluate the cornerstone of GATT law which is non-discrimination. Definition of Terms GATT - General Agreement on Tariffs and Trade Like Products or Likeness - having the same characteristics. The term applies to the products of different countries being exported and imported. The purpose of defining "Like Products" is to create a criterion by which likeness to be measured. One must described the individual criteria with some care, and after that it is possible to talk about degrees of likeness within the boundaries of those criteria or characteristics. Discrimination - in economic, the definition is less favourable treatment of goods from one foreign country vis a vis the goods of another foreign country. Brief History of GATT Law After World War II a new order came in about trading. The Breton Woods Conference1 in 1944, created the International Monetary Fund2 nd the World Bank for economic restructuring and development in Western Europe. The General Agreement on Trade and Tariff was created at the first session of the Preparatory Committee of UN Conference on Trade and Employment in 1946. (Williams, 2006). The GATT's initial purpose was to negotiate tariff concessions among members and to establish a code of conduct and procedures for the resolution of trade disputes by negotiation. Successive negotiations (called rounds) have also focussed on the code of conduct for no tariff barriers. The GATT was founded on the principles of non discrimination and multilateralism in international trade. Non discrimination is expressed via unconditional Most Favoured Nation status for all contracting parties. By this convention "if the tariff on imports from one country is decreased, the tariff on all imports of the same goods from other GATT members must be reduced." (Williams, 2006). The debacle of the 1930's led to a reassessment, realignment and restructuring of the world economy. The result of the reassessment was that tariff wars were destructive