New Developments in the Most-Favoured- Nation Clause with Particular Reference to Trade

Abstract

The reconstruction of the international trade relations after the Second World War (1939-1945) has been accommodated by means of multilateral trade negotiations. These negotiations insured the birth of GATT in 1948. The most-favoured-nation clause (non-discrimination) is the cornerstone of GATT, and it is well established in GATT subsequent trade rounds of negotiations. In the Uruguay Round (the last trade round 1986-1994) the principle was incorporated in WTO trade agreements. The most-favoured-nation clause has for decades been a common feature of bilateral trade relations. Efforts have been undertaken in recent years to translate the clause in a multilateral framework, as it represents a suitable solution to the chaos in international trade relation after World War II. This thesis contains four chapters. The method adopted in it is a historical, analytical and critical approach. Chapter One deals with the most-favoured-nation clause before WTO. It shows the long history of the clause in international trade relations. Also it defines the notion of most-favoured-nation clause achieving equality is the main function of the inclusion of the MFN in the GATT. The chapter goes further and explains that there are many fields for applying the clause but it has origin in trade agreements. The chapter also deals with types of MFN clauses, and some experience of implementation of the clause. Chapter Two deals with the most-favoured-nation clause in WTO agreements. It defines the WTO and its regime. The main MFN provisions in WTO trade agreements are Article I of GATT which governs trade in goods, Article II of GATS which governs trade in services, and Article 4 of TRIPS which governs IPR. xvi Chapter Three explains the exceptions to the MFN clause in WTO agreement. They include exceptions allowed for development purpose, protection of public order, and protection of national security. Chapter Four deals with conclusions reached by this study and it makes recommendations to be observed in the future WTO trade negotiations.