Trade without discrimination
1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners.
Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.
This principle is known as most-favoured-nation (MFN) treatment
Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. 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.
2. National treatment: Treating foreigners and locals equally
Imported and locally produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.
National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.
Trading blocs should be seen as a step backward from global free trade
-They are a systemic problem for the WTO
-The scale of them means that the majority of trade goes through the WTO which means there is a lot of paper work and processes which can sometimes make trade slow and complex.
-It needs to be simplistic as its ‘gotten out of hand’ and is only favourable to a handful of larger countries.
-They effect developing nations and new smaller companies as there is complex regulations, rules and paperwork which can increase the production costs and reduce profit further.
-Time periods are too long (5-7 years as an example). There is a feeling that the time needed to establish them will keep increasing
-150 members have to agree on decisions in the WTO, this can often create stalemate and not help liberalization of markets.
Trading blocks are a step toward global free trade
-Article 24 allows for free trade agreements and customs unions meaning that companies and nations can increase trade, employment and exports easily through established trade links with organizations in different countries.
-Lowers barriers and boundaries allowing companies to export to new markets that were previously not possible to enter into