FREEDOM OF TRADE, COMMERCE AND INTERCOURSE: The GATT/ WTO connection

The World Trade Organization Ministerial Conference of 1998, in the Palace of Nations (Geneva, Switzerland).

Articles 301 & 304 (a) rings a bell or two regarding a well- known concept in International trade i.e.  Regional Trade Agreements or Free trade Agreements (RTA or FTA) & National treatment. The GATT- WTO regime has put in place a well-organized system of free trade/ trade without barriers amongst member Nations.

To understand the above, we must first understand the concept of Most-favoured-nation followed by WTO.

Most-favoured-nation treatment(MFN) (GATT Article I, GATS Article II and TRIPS Article 4) is the principle of not discriminating between one’s trading partners, meaning that no member state would discriminate between members by favouring/ disfavouring any of the member State to distort competition (by varying taxes etc.).

Regional Trade Agreements (RTAs or FTAs) falls as an exception to MFN Treatment. This exception allows a member state signatory to a particular RTA to lower the Tariff barriers like taxes for other members of RTA, even though the other WTO members have to face these higher Tariff barriers/ taxes.

National Treatment mandates every member state not to treat the imported goods any less favourably than domestically produced goods after they have been imported in domestic market. National Treatment is in place to counter Non- Tariff barriers in world trade (e.g. technical standards, security standards etc.) discriminating against imported goods.

Now what Articles 301 & 304(a) and following articles embody is the fusion of two of the above concepts- Regional Trade Agreement & National Treatment. The Constitution mandates that the trade commerce & intercourse between all the states in territory of India be allowed to flow as smoothly as possible except where public interest demands otherwise. Now this practically makes territory of India akin to a FTA area comprising of all the Indian states. Also the Principle of National Treatment is very well assimilated in Article 304 (a) whereby the goods imported in any Indian State would be given the same treatment as the goods produced/ manufactured domestically, thereby not facing any hurdle/ barrier/ discrimination.

To Be Continued....