1. Trade without discrimination

♤ Most Favored Nation: Treating other people equally: MFN clause under WTO requires a country to provide any concessions, or granted in a trade agreement to one nation to all other World Trade Organization member countries. It ensures non-discriminatory trade policy because it ensures equal trading among all WTO members. However, it allows certain exceptions:

o Countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside

o Countries can give developing countries special access to their markets.

o Action against dumping: A country can raise barriers against products that are considered to be traded unfairly from specific countries.

o In services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions.

♤ 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.

2. Freer trade: gradually, through negotiation: Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. From time to time other issues such as red tape and exchange rate policies are also discussed.

3. Predictability: through binding and transparency: This gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices.

4. Promoting fair competition: The WTO is sometimes described as a “free trade” institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. The rules on non-discrimination — 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.

5. Encouraging development and economic reform: The WTO system contributes to development while giving developing countries the flexibility in the time to implement the system’s agreements.

1.5. WTO Agreements

The WTO agreements cover goods, services and intellectual property.