Most Favoured Nation Principle

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Most Favoured Nation Principle

Any advantage granted to the product of one country must be granted to he others.

Decline of the mercantilist principle trade is a matter of one nation winning over the others replaced by principle that trade leads to comparative advantage which benefit nations.

Advantages:

. Efficient - Most efficient produces

2. world trading system more secure

3. simplifies protection

4. constitutional protection against special interest groups within country.

5. Access for new entrants.

Disadvantages:

Undermined by various exceptions, does not mean is useless simply less efficient.

. Developing countries exception - GSP system (some systems of GSP are under challenge from India.

2. Free Trade exception Art. 24.

3. Art. 19 Agreement on safeguards,

4. art 6 Antidumping and subsidies.

5. Balance of payment Arts 12 ff.

6. Internal security art 21.

7. Retaliation (not on MFN basis)

Includes Customs duties , rules, regulations, taxation, methods of valuation. All of these are subject to MFN.

What is a "like product" in the context of Art. 1:

Japan Case: Held that the Agreement left a wide discretion to countries to classify product and the burden of proof is on the country alleging that there is a violation. Since there was not intl. classification it was gradually competence of the State to classify. There was no illness in this case.

Thus home country classification will be given consideration particularly where there is not intl classification.

Spain coffee case:

May look to geography, cultivation method + processing - but coffee is a single product. In fact most coffee sold as a blend of dif types.

Even if there is no infringement it may be argued that there is a non violation
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German Sardine Case

Even thought there may have been no violation but still not impairment. Thus were a country changes then competitive environment although there is no violation another country may have been removed of the reasonable expectation and thus is a case of non violation nullification.

US Brazil Footwear Case:

If you have general legislation which applies to all products then may have violation of like product principle.

Internal Measures:

Any internal regulation not only has to accord with MFN Treatment but also to MFN principle.

Belgian Family Allowances Case:

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