GATT Cornerstones

The GATT cornerstones are the central principles of the WTO, and are echoed in the GATS, TRIPS and other WTO agreements.

Most Favoured Nation Treatment (ART. 1)

Found in Article 1 of the GATT

  • A member nation must treat all member nations as well as it treats any nation (the best treatment given, no matter if it is to a contracting party or not, must be afforded to all members).
  • ”With respect to customs duties … [and other related barriers] … any advantage … granted by any contracting party … shall be accorded immediately and unconditionally to the like product originating in … all other contracting parties” (GATT Art. 1:1)

In other agreements:

  • GATSGATS Art. 2

Tariff Bindings (ART. 2)

Found in Article 2 of the GATT

  • A county cannot increase tariffs above the rates pledged in the schedules
  • ”Each contracting party shall accord … treatment no less favourable than that provided for in the … Schedule” (GATT Art. 2:1)

In other agreements:

  • GATSGATS Art. 18, Part 4

National Treatment (ART. 3)

Found in Article 3 of the GATT

  • A country shouldn’t distinguish, with regards to treatment after tariffs have been applied, between domestic and imported products
  • “Internal taxes and … regulations … should not be applied to imported or domestic products so as to afford protection to domestic production” (GATT Art. 3:1)
  • ”… products … imported … shall not be subject, directly or indirectly, to internal taxes … in excess of those applied … to like domestic products” (GATT Art. 3:2)

In other agreements:

  • GATSGATS Art. 17

Ban on Quantitative Restrictions (ART. 4)

Found in Article 11:1 of the GATT

  • Quantitative restrictions (Quotas), including trade bans (0 Quotas), are disallowed.
    • However, each tariff has a quota which achieves the same result, and may be replaced for that.
    • This change, it is hypothesised, was to make a more transparent and uniform system, although it has little economic effect, other than shifting the gain from the trade barrier from the exporting to the importing country
  • “No prohibitions or restrictions other duties, taxes or other charges, whether made effective through quotas, import or export licenses or other meaures, shall be instituted or maintained by any contracting party” (GATT Art. 11:1)

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