Principles of the Wto Trading System

In: Business and Management

Submitted By vomo777
Words 650
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Logistics & International Trade
Principles of the WTO Trading System
The WTO has five fundamental principles that underpin the framework for its national trade policies. The WTO agreements are rules based and these rules are established as a result of a majority vote by its members and are such are referred to as negotiated agreements. The five fundamental WTO principles are;
• Trade without discrimination
• Freer trade: through negotiation
• Predictability: through binding and transparency
• Promoting fair competition
• Encouraging development and economic reform

Trade without discrimination
This WTO principle agreement advocates that countries cannot discriminate between its trading partners. This is in WTO language is referred to as Most-favoured-nations (MFN). Under the General Agreement on Trade in Services (GATS), when a country opens up its boarders and allows foreign competition in a particular country, that host country must also give equal opportunity to all WTO member countries in the same sector. This principle covers all services but the agreement allows some exceptions. Some of the exceptions are;
A country is able to set up a trade agreement that applies to goods traded only within its trading partners and it can discriminate against goods from outside the country, special access to markets can be given to developing nations if certain products from some specific countries are considered to be traded unfairly, the host country is able to raise its barriers against such specific products. However these exceptions are reviewed from time to time and they are not meant not to last more than 10 years. Also under this principle is treating foreigner and local equally as well as treating locally produced goods and imported goods the same way. So when an imported product arrives at a country it should be given the national treatment.

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