13. Though it is a multilateral institution, the GATT/WTO has adopted a bilateral approach to multilateral bargaining according to which reciprocal negotiations occur on a voluntary basis through time between pairs of countries or among small numbers of countries, with the results of these bilateral negotiations then multilateralized to the full GATT/WTO membership by a non-discrimination requirement that tariffs abide by the most-favored nation (MFN) principle.
14. MFN Treatment: Non- discrimination between countries – the Most Favoured Nation principle is one of the most fundamental principles of the WTO. It requires member states to accord the most favourable tariff and regulatory treatment given to the product of any one member and/or non member at the time of export or import of “like products” to all other WTO members. Under the Most Favoured Nation rule, should WTO member state A agree in negotiation with state B, which needs not to be a WTO member, to reduce the tariff on the same product X to five percent, this same tariff rate must apply to all other WTO members as well. In other words, if a country gives favourable treatment to one country regarding a particular issue, it must handle all members equally regarding the same issue.
MFN and national treatment are designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.
15. The WTO agreements, which were the outcome of the 1986-94 Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. Among the gains are export opportunities. They include:
i. fundamental reforms in agricultural trade.
ii. phasing out quotas on developing countries’ exports of textiles and clothing.
iii. reductions in customs duties on industrial products.
iv. expanding the number of products whose customs duty rates are “bound” under the WTO, making the rates difficult to raise.
v. phasing out bilateral agreements to restrict traded quantities of certain goods — these “grey area” measures (the so-called voluntary export restraints) are not really recognized under GATT-WTO.
16. In addition, liberalization under the WTO boosts global GDP and stimulates world demand for developing countries’ exports.
13. Though it is a multilateral institution, the GATT/WTO has adopted a bilateral approach to multilateral bargaining according to which reciprocal negotiations occur on a voluntary basis through time between pairs of countries or among small numbers of countries, with the results of these bilateral negotiations then multilateralized to the full GATT/WTO membership by a non-discrimination requirement that tariffs abide by the most-favored nation (MFN) principle.14. MFN Treatment: Non- discrimination between countries – the Most Favoured Nation principle is one of the most fundamental principles of the WTO. It requires member states to accord the most favourable tariff and regulatory treatment given to the product of any one member and/or non member at the time of export or import of “like products” to all other WTO members. Under the Most Favoured Nation rule, should WTO member state A agree in negotiation with state B, which needs not to be a WTO member, to reduce the tariff on the same product X to five percent, this same tariff rate must apply to all other WTO members as well. In other words, if a country gives favourable treatment to one country regarding a particular issue, it must handle all members equally regarding the same issue.MFN and national treatment are designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.15. The WTO agreements, which were the outcome of the 1986-94 Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. Among the gains are export opportunities. They include:i. fundamental reforms in agricultural trade.ii. phasing out quotas on developing countries’ exports of textiles and clothing.iii. reductions in customs duties on industrial products.iv. expanding the number of products whose customs duty rates are “bound” under the WTO, making the rates difficult to raise.v. phasing out bilateral agreements to restrict traded quantities of certain goods — these “grey area” measures (the so-called voluntary export restraints) are not really recognized under GATT-WTO.16. In addition, liberalization under the WTO boosts global GDP and stimulates world demand for developing countries’ exports.
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