Now-a-days the 'National treatment' principle is considered more important than the 'Most Favored Nation' principle. Discuss why?
CS Professional · International Business – Laws and Practices · PYQS · June 2017
Now-a-days the 'National treatment' principle is considered more important than the 'Most Favored Nation' principle. Discuss why?
Answer & Explanation:
In Most-favoured-nation (MFN) principle, "treating other people equally". Under the WTO agreements, countries cannot normally discriminate between their trading partners. When a country grants someone a special favour (such as a lower customs duty rate for one of their products), it has to do the same for all other WTO members. This principle is known as most-favoured-nation (MFN) treatment. It is very important and the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. However, in national treatment principle, "treating foreigners and locals equally". The principle of national treatment states that imported and locally-produced goods should be treated equally, at least after the foreign goods has entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. The reason behind this argument is that, in general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners whether rich or poor, weak or strong. Each member treats all the other members equally as "most-favoured" trading partners. If a country improves the benefits that it gives to one trading partner, it has to give the same "best" treatment to all the other WTO members so that they all remain "most-favoured". This ultimately becomes national treatment.
Topics: International Trade Law
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