RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/W/114
14 April 1999
(99-1488)
Working Group on the Interaction
between Trade and Competition Policy
THE FUNDAMENTAL WTO PRINCIPLES OF NATIONAL TREATMENT,
MOST-FAVOURED-NATION TREATMENT AND TRANSPARENCY
Background Note by the Secretariat
1. This note has been prepared in response to a request made by the Group at the informal
meeting which took place on Thursday, 28 January 1999, as an input to the Group's consideration of
the relevance of the fundamental WTO principles of national treatment, transparency, andmost-favoured-nation treatment to competition policy and vice versa (the first specific element
incorporated in the General Council's decision regarding the work of the Group in 1999
1).  As agreed
by the Group when the request was made, the paper is directed only toward one aspect of this work
element, namely the relevance of fundamental WTO principles of national treatment, transparency,
and most-favoured-nation treatment to competition policy, and not the "vice versa" aspect.  In thisregard, it was understood that the paper would be capable of evolution and that the latter aspect might
be considered at a later stage, if the Group so requested.
2. With this background, the principal aim of this paper is to provide factual background on the
purpose, content, location in the WTO Agreements and (in a summary fashion) experience with the
application of the principles of national treatment, most-favoured-nation treatment and transparency.
It does not seek to analyse the relevance of this for competition law and policy since that was not part
of the mandate given to the Secretariat.  Rather, it was understood that this was a task for Members inthe Working Group.
3. The paper first summarizes the observations that have been made by Members on the issue of
the relevance of basic WTO principles.  The structure of the remaining parts of the paper is as
follows:  each of the three principles of national treatment, most-favoured-nation treatment and
transparency is discussed in a separate section.  For each principle, the paper first outlines the mainprovisions in which it is found and the purpose of the principle.  The beneficiaries of the principle
(i.e., persons, goods, services, etc.) and the types of measures to which it applies are then described.
Select highlights of experience with the application of the principle and relevant exceptions to its
application are noted.
I. OBSERVATIONS BY MEMBERS
4. Interest in the relevance of fundamental WTO principles such as national treatment,
most-favoured-nation treatment and transparency for competition law and policy appears to be
motivated by several interrelated perceptions that have been mentioned in the Group.  First, it has
been suggested that adherence to such principles in the application of competition law and/or policy
will stimulate trade and investment, and is important to facilitate the sound application of relevant
                                                     
1 WT/GC/M/32, p. 52WT/WGTCP/W/114
Page 2
legal provisions and to ensure equal treatment of foreign and domestic firms in all jurisdictions.2
Further to this point, it has been said that, in many cases, the provisions and application of
competition legislation may, in fact, already be consistent with the principles under discussion.3
Nonetheless, it has also been suggested that the matte r is a complex one that merits further study.  For
example, it has been said that in reflecting on th e general question of the consistency of competition
law and policy with fundamental WTO principles, it would be important to consider a range of
institutional questions, possibly including matters such as access to the courts and the exercise of
enforcement discretion.4
5. The importance of the existence of a well-define d competition law to the application of the
principles of national treatment and transparency in the field of competition policy is explored in a
contribution to the Working Group by Switzerland (WT/WGTCP/W/89).5  The contribution suggests
that, in considering the application of these prin ciples, a distinction should be made between two
types of markets, namely markets in which there is a functioning competition law and markets in
which there is no such legislation.  It is suggested that the relevance of the principles of national
treatment and transparency is clear in situations where competition legislation exists and is applied.
Where no such legislation exists or is applied, their relevance is less clear.
6. A second major source of interest in the content and relevance of fundamental WTO
principles vis-à-vis  competition policy objectives concerns their potential contribution in addressing a
range of governmental barriers to competition.6  With reference to the matter of exceptions from the
principles of national treatment and most-favoured-nation treatment, some Members have suggested
that Article VI of the GATT and the Agreement on Anti-Dumping themselves constitute a significant
exception to these principles, to the extent that such rules are applied selectively rather than todomestic producers and all foreign suppliers equally.
7  On the other hand, it has been pointed out that
nowhere in the GATT is it stated that Article VI and measures to counter dumping or subsidization
constitute exceptions to other provisions of the GATT.  Rather, the non-discrimination provisions in
the WTO system are intended to be applied only to fairly-traded imports.8
7. The importance of WTO principles such as national treatment and most-favoured-nation
treatment with reference to competition-related aspects of multilateral and other agreements relating
to foreign direct investment has also been noted in related discussions in the Group.9
                                                     
2 Comments of the representatives of various Members, including Brazil, Canada, Australia,
Switzerland, Nigeria and the European Community and its member States reported in WT/WGTCP/M/4,para. 14;  WT/WGTCP/M/5, para. 64;  and WT/WGTCP/M/6, paras. 55, 90 and 92.
3 In this regard, in the Group's meeting of 27 and 28 November 1997, the representative of Canada said
that a study of this question had been carried out with reference to the competition legislation of the threeNAFTA partners (Canada, the United States and Mexico).   The study had considered both the scope and content
of the three countries' competition legislation, and had found that, in general, such legislation was consistent
with the principle of national treatment.  Comments of the representative of Canada reported inWT/WGTCP/M/3, para. 14 and written elaboration in document WT/WGTCP/W/57.
4 Comments of the representatives of the European Community and its member States and Brazil
reported in WT/WGTCP/M/3, para. 14 and WT/WGTCP/M/4, para. 14, respectively.
5 Comments of the representative of Switzerland reported in WT/WGTCP/M/5, para. 78
6 Comments of the representative of Hong Kong, China reported in WT/WGTCP/M/4, paras. 4 and 47
and WT/WGTCP/M/5, para. 14.
7 Comments of the representatives of Korea and Hong Kong, China reported in WT/WGTCP/M/5,
paras. 45 and 67, respectively, and related observations by the representatives of Japan and Norway in paras. 42and 55, respectively.
8 Comments of the representative of the United States reported in WT/WGTCP/M/5, para. 68.
9 Comments of the representative of Norway reported in WT/WGTCP/M/6, para. 49.WT/WGTCP/W/114
Page 3
8. Several suggestions have been put forward in  the Working Group for further consideration of
the relevance of fundamental WTO principles for competition law and policy.  In this regard, it has
been suggested that a way to deepen the discussion would be to consider the relevance of fundamental
WTO principles for specific elements of competition law and policy that may be important at the
international level.10  It has been said, in addition, that in reflecting on the general question of the
consistency of competition law and policy with fu ndamental WTO principles, it may be important to
consider a range of institutional questions, possibly including matters such as access to the courts and
the exercise of enforcement discretion.11
9. The related suggestion has also been made that , in the event that further analysis of the
relevance of basic WTO principles for competition-related matters leads to the conclusion that these
principles should be applied in relation to competition law and policy, the principles might have to be
adapted to the specific needs of competition policy, as was done for services in the GATS and forintellectual property in the TRIPS Agreement.
12
10. With regard to the perceived broader relevance of fundamental WTO principles to other
aspects of the interaction between trade and competition policy, it has been suggested that, in
addressing government measures that distort or limit competition, the Group should seek to draw
upon, and enhance the role of, fundamental WTO principles and basic objectives of competitionpolicy, including non-discrimination, econom ic efficiency and consumer welfare.
13
II. THE PRINCIPLE OF NATIONAL TREATMENT
A. MAIN PROVISIONS IN WHICH THE PRINCIPLE IS FOUND
11. The principle of national treatment is set out in the following provisions of the three main
WTO Agreements, dealing respectively with trade in goods, trade in services and intellectual propertyrights:
(i) GATT:  Article III.  Of particular relevance is Article III:4, which requires national
treatment in respect of all laws, regulations and requirements affecting the internal
sale, offering for sale, purchase, transportation, distribution or use of goods;
(ii) GATS:  Article XVII;(iii) TRIPS Agreement:  Article 3.
The text of these provisions is reproduced in Appendix I to this paper.
12. The principle of national treatment is also incorporated in various other agreements that form
part of Annex IA of the WTO Agreement – the part of the WTO that contains multilateral agreements
on trade in goods, for example the Agreements on Technical Barriers to Trade and on the Application
of Sanitary and Phytosanitary Measures.  It is also a cornerstone of the plurilateral Agreement onGovernment Procurement.
                                                     
10 Comments of the representatives of Brazil and the European Community and its member States
reported in WT/WGTCP/M/6, paras. 90 and 92, respectively.
11 Comments of the representatives of various Members reported in WT/WGTCP/M/3, para. 14 and
WT/WGTCP/M/4, para. 14
12 Comments of the representative of Switzerland reported in WT/WGTCP/M/5, para. 78 and
WT/WGTCP/M/6, para. 103.
13 Comments of the representative of Hong Kong, China reported in WT/WGTCP/M/4, paras. 4 and 47.WT/WGTCP/W/114
Page 4
B. BACKGROUND /PURPOSE OF PRINCIPLE
13. The essence of the principle of national treatme nt is to require that a WTO Member does not
put the goods or services or persons of other WTO Members at a competitive disadvantage vis-à-vis
its own goods or services or nationals.  This having been said, it is important to note that the purpose
and scope of the principle of national treatment differs as between the three main WTO Agreements.
14. The focus of the GATT, at least as originally negotiated in 1947, was on the control and
liberalization of border measures restricting international trade.  A key principle is that, as a general
rule, any border measures to give a competitive advantage to domestic products should take the form
of customs tariffs imposed at the border and that the level of such customs tariffs should be a matter
for negotiation and binding in national schedules.  Within this scheme of things, Article III on
national treatment plays a critical role since, as its paragraph 1 makes clear, it is designed to ensure
that all other measures, referred to as "internal" measures, are not applied to imported or domesticproducts so as to afford protection to domestic production.  It thus serves the purpose of ensuring that
internal measures are not used to nullify or impair the effect of tariff concessions and other
multilateral rules applicable to border measures.  The focus in the GATT on border measures, together
with its historical background as replacing a proliferation of bilateral trade agreements with a
multilateral one, explain why most-favoured-nation treatment is often referred to as the cornerstone ofthe GATT, notwithstanding the key role of national treatment in regard to internal measures.
15. The role and purpose of national treatment in the WTO agreement on services – the General
Agreement on Trade in Services (GATS) – is somewhat different.  This difference has its origin in the
fact that, in the area of trade in services, it is generally not possible to make a distinction between
border measures and internal measures, especially since, under the GATS, the supply of servicesthrough the commercial presence in the territory in question of a foreign service supplier is treated as
a form of trade in services.  Hence, the approach in the GATS is not to make national treatment a
principle of general application but to provide for it to be applied when a specific commitment has
been made and recorded in national schedules that form part of the Agreement.  As is made clear in
Article XIX of the GATS, the scope of the schedules is to be progressively enlarged throughsuccessive rounds of trade negotiations with a view to progressively higher levels of liberalization – in
the same way as trade in goods has been progressively liberalized through successive tariff
negotiations.
16. In the area of intellectual property, national treatment has traditionally been the cornerstone of
the public international law in this area, notably as reflected in the Paris and Berne Conventions.
14
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPSAgreement) is no different in this respect from the main pre-existing conventions, on which it buildsand whose main substantive provisions it incorporates.  With some relatively minor exceptions,
national treatment applies to all aspects of the protection of intellectual property addressed by the
Agreement.
C. S
COPE OF THE NATIONAL TREATMENT PRINCIPLE
17. This section looks at two aspects of the scope of the national treatment principle as it is
embodied in the three main WTO Agreements:  the beneficiaries of national treatment;  and the types
of measures to which it applies.
                                                     
14 Article 2 of the Paris Convention for the Protection of Industrial Property and Article 5 of the
Berne Convention for the Protection of Literary and Artistic Works.WT/WGTCP/W/114
Page 5
Beneficiaries
18. In the case of Article III of the GATT, the subject-matter which must benefit from national
treatment is not the persons of other Members but the products of other Members.  While this is
apparent on the face of Article III, it has also been emphasized in various panel decisions.  Forexample, in Canada – Administration of the Fo reign Investment Review Act  (1984), the Panel noted
that there was no basis, under the terms of Article III, to consider whether foreign investors were
adversely affected by obligations imposed on them under the legislation at issue.
15  However, it
should also be noted that it has been held that the mere fact that national measures at issue are applied
to persons rather than to products does not mean that they escape the scope of Article III if the
measures discriminate according to whether such persons are dealing in imported or domestically
produced goods.16
19. In the case of trade in services, the potential beneficiaries of national treatment under the
GATS are both the services of other Members and the service suppliers of other Members - although,
as earlier mentioned, it should be recalled that whether they actually benefit will depend on a specific
commitment to grant national treatment having been made in the relevant national schedule and on
any conditions and qualifications set out therein.  The definition of the service suppliers of otherMembers is to be found in Article XXVIII of the Agreement.  It includes natural persons of other
Members and, broadly speaking, local subsidiaries or branches of foreign-owned or controlled
companies.
20. It should be noted that, while the above-noted GATT and GATS provisions have applicability
(where other relevant elements are satisfied) to imported goods or services or foreign firms supplyingservices on the domestic market, they do not apply to the treatment of goods and services destined for
the supply of foreign markets through exportation.
21. Under the TRIPS Agreement, the beneficiaries of national treatment are the "nationals of
other Members".  Article 1.3 makes it clear that the term "nationals" is to be defined as those natural
or legal persons that would meet the criteria for eligibility for protection under the main pre-existingintellectual property conventions, if all Members of the WTO were members of those conventions.
This means that certain persons who are not nationals are assimilated to nationals for this purpose, for
example, in the area of industrial property, persons who have a real and effective industrial or
commercial establishment in a WTO Member and, in the area of copyright, persons who first publish
a work in a WTO Member.
Types of measures to which the national treatment principle applies
22. With regard to the national treatment principl e as embodied in the GATT, the provisions of
Article III:4 are probably most relevant to the area of competition law and policy.  The types of
measures to which this provision applies are "all laws, regulations and requirements affecting [the]
internal sale, offering for sale, purchase, transportation, distribution or use" of products of national
origin.  The significance of the term "internal" has already been discussed in paragraph 14 above.  Itmight be noted that an interpretative note to Article III makes it clear that the national treatment
standard contained in Article III applies to internal taxes and laws and regulations even where they are
                                                     
15 Canada – Foreign Investment Review Act (FIRA) , para. 6.5, BISD 30S/140, L/5504, adopted on
7 February 1984
16 The Panel on United States – Section 337 of the Tariff Act of 1930  held as follows:  "Nor could the
applicability of Article III.4 be denied on the grounds that  most of the procedures in the case before the Panel
are applied to persons rather than to products, since the factor determining whether persons might be susceptibleto Section 337 proceedings or federal di strict court procedures is the source of the challenged products, that is
whether they are of United States origin or imported", para. 5.10, BISD 36S/345, L/6439, adopted on
7 November 1989.WT/WGTCP/W/114
Page 6
collected or enforced, in the case of imported products, at the point or time of importation.  Thus, for
example, the Panel on United States – Section 337 of the Tariff Act of 1930  found that, because
Section 337 was used as a means for the enforcement of United States patent law at the border and
that patent law was to be regarded as an internal law within the meaning of Article III:4, Section 337
was subject to the provisions of Article III of the GATT.17
23. As regards the scope of the "laws, regulations and requirements" referred to in Article III:4 of
the GATT, panels have tended to take a broad approach.  One important factor in this regard has been
that Article III:4 covers "laws, regulations and requirements affecting  the internal sale, …" etc. of
products (emphasis added).  In an early dispute settlement case, the Panel on Italian Discrimination
against Imported Agricultural Machinery  emphasized that the application of Article III was not
intended to be limited to measures that were overtly focused on regulating the conditions of trade.
Rather, it was determined that the wording of the Article was intended to cover "any laws orregulations which might adversely modify the conditions of competition between … domestic and
imported products on the internal market".
18  This interpretation has been upheld by subsequent
GATT and WTO panels and the Appellate Body.19  An example of this broad view of when a
governmental action can be held to be a law, regulation or requirement within the meaning of
Article III:4 can be found in the Panel on Canada – Foreign Investment Review Act (FIRA)  which
considered that written and legally binding purchase and export undertakings submitted by investors
were covered, even though FIRA did not  make their submission obligatory.20  Another example can
be found in the Panel on EC – Parts and Components  which considered that requirements which an
enterprise voluntarily accepts in order to obtain an advantage from the government come within the
scope of Article III:4.21  It might also be noted that Article III:4 has been understood to apply to
procedural as well as substantive laws, regulations and requirements.22
24. In regard to import monopolies, Article II:4 of the GATT requires that, except where
otherwise agreed, such monopolies shall not be operat ed so as to afford protection on the average in
excess of the amount provided for in a country's tariff schedule for the product in question.23  A
number of panels have, in addition, made it clear that the practices of state trading enterprises aresubject to the provisions of Article III of the GATT on national treatment when they concern internal
laws, regulations or requirements affecting such matters as the imposition of a minimum price for the
sale of imported products, the imposition of a six-pack configuration requirement for imported beer
but not domestic beer, practices regarding the listing and de-listing of products by state-operated
liquor stores and regulations affecting internal transportation.
24
                                                     
17 United States – Section 337 of the Tariff Act of 1930 , paras. 5.8 and 5.10, BISD 36S/345, L/6439,
adopted on 7 November 1989
18 Italian Discrimination against Imported Agricultural Machinery , para. 12, BISD 7S/60, L/833,
adopted on 23 October 1958
19 See, for example, Panel Report on EC – Regime for the Importation, Sale and Distribution of
Bananas , para. 7.175, WT/DS27/R
20 Canada – Foreign Investment Review Act (FIRA) , para. 5.4, BISD 30S/140, L/5504, adopted on
7 February 1984
21 EC – Parts and Components , para. 5.21, BISD 37S/132, 197
22 United States – Section 337 of the Tariff Act of 1930 , para. 5.10, BISD 36S/345, L/6439, adopted on
7 November 1989
23 In this regard, it might be noted that import mark-ups imposed by such monopolies are assimilated
for this purpose to customs duties.  Interpretative note to Article II:4 of the GATT, providing that the provisionsof this paragraph will be applied in the light of the provisions of Article 31 of the Havana Charter.
24 Canadian – Import Distribution and Sale of Certain Alcoholic Drinks by Provincial Market
Agencies , para. 4.26, BISD 35S/37, L/6304, adopted on 22 March 1988;  Canada – Import Distribution and Sale
of Certain Alcoholic Drinks by Provincial Market Agencies , paras. 5.4, 5.15 and 5.31, BISD 39S/27,WT/WGTCP/W/114
Page 7
25. Under the GATS, the national treatment commitment, where it has been made, applies in
respect of "all measures affecting the supply of services".  A "measure" is defined by Article XXVIII
to mean "any measure by a Member, whether in the form of a law, regulation, rule, procedure,
decision, administrative action, or any other form".  Furthermore, Article I:3 makes it clear that such
measures mean measures taken by central, regional or local governments and authorities, andnon-governmental bodies in the exercise of powers delegated by such governments or authorities.
Article XXVIII(c) defines "measures by Members affecting trade in services" to include measures in
respect of:  (i) the purchase, payment or use of a service;  (ii) the access to and use of, in connection
with the supply of a service, services which are required by those Members to be offered to the public
generally;  and (iii) the presence, including commercial presence, of persons of a Member for the
supply of a service in the territory of another Member.  While there is less experience in applying this
provision in particular cases than there is in respect of Article III (GATT), the Appellate Body hastaken the view that the term "measures" as defined in the GATS must be given a broad scope of
application, especially in view of the use of the word "affecting" in the definition and the way it has
been interpreted under Article III:4 of the GATT.
25
26. It should also be noted that Article VIII of the GATS requires Members to ensure that any
monopoly supplier of a service in its territory does not, in the supply of the monopoly service in therelevant market, act in a manner inconsistent with that Member's specific commitments, and does not
abuse its monopoly position to act in other markets in a manner inconsistent with such commitments.
These provisions also apply to cases of exclusive service suppliers, where a Member, formally or in
effect, (a) authorizes or establishes a small number of service suppliers and (b) substantially prevents
competition among those suppliers in its territory.
27. Under the TRIPS Agreement, the national treat ment obligation contained in its Article 3
applies to the "protection of intellectual property".  A footnote to Article 3 defines the term
"protection" as including "matters affecting the availability, acquisition, scope, maintenance and
enforcement of intellectual property rights as well as those matters affecting the use of intellectual
property rights specifically addressed in this Agreement".
D. T
HE NO LESS FAVOURABLE TREATMENT STANDARD
28. In each of the three main WTO Agreements, GATT, GATS and TRIPS, the national treatment
principle is expressed in terms of a no less favourable treatment standard.  Thus, the language of
Article III:4 of the GATT in this regard has also been used in Article XVII of the GATS and Article 3
of the TRIPS Agreement.  In the case of the TRIPS Agreement, it might be noted that this was a
conscious decision to prefer the no less favourable treatment standard over the "same protection" or
"same rights" standards as found in the main pre-existing international intellectual propertyconventions.
26
Equality of competitive opportunities
29. There has been extensive interpretation of the no less favourable treatment standard as
reflected in Article III:4 of the GATT.  This interpretation has revolved around the concept thatArticle III:4 requires equality of competitive opportunities between domestically produced and
imported products, that it protects expectations rather than specific outcomes in this regard and that it
                                                                                                                                                                    
WT/DS17/R, adopted on 18 February 1998;  United States – Measures Affec ting Alcoholic and Malt Beverages ,
para. 5.63, BISD 39S/206, WT/DS23/R, adopted on 19 June 1992
25 See Report of the Appellate Body in EC – Regime for the Importation, Sale and Distribution of
Bananas , para. 220, WT/DS27/AB/R
26 Article 3 of the Paris Convention for the Protection of Industrial Property and Article 5 of the Berne
Convention for the Protection of Literary and Artistic Works.WT/WGTCP/W/114
Page 8
prohibits measures that might adversely affect the conditions of competition facing imported products
relative to domestically produced products on the internal market.  Thus, an early panel stated that
Article III:4 was intended to cover "any laws or regulations which might adversely modify the
conditions of competition between the domestic and imported products on the internal market" and
that "the intent of the drafters was to provide equal conditions of competition once goods had beencleared through customs".
27  A subsequent panel stated that the rationale of Article III was "to protect
expectations of the contracting parties as to the competitive relationship between their products and
those of other contracting parties" and went on to say that it served "to protect current trade but also to
create the predictability needed to plan future trade".28  Another panel stated that "the words 'treatment
no less favourable' in paragraph 4 (of Article III) call for effective equality of opportunities for
imported products in respect of the application of laws, regulations and requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution or use of products".29  T h e
reasoning of these earlier panels has been endorsed by WTO panels30 and by the Appellate Body.31
30. In the case of the GATS, the interpretation of the no less favourable treatment standard as one
of ensuring no less favourable conditions of competition is built into the national treatment provision
of the Agreement itself.  Paragraph 3 of Article XVII of the GATS states that:
"Formally identical or formally different treatment shall be considered to be less
favourable if it modifies the conditions of competition in favour of services or service
suppliers of the Member compared to like services or service suppliers of any other
Member."
Formally identical vs. formally different legal requirements
31. A consequence of the notion that an effective equality of competitive opportunities must be
available and also that this has to be seen as a minimum standard, i.e. that Members are free to grant
more favourable treatment to imported products if they so wish, is that jurisprudence under the GATT
has made it clear that, on the one hand, the existence of formally different legal requirements is not, in
itself, dispositive in establishing a breach of the no less favourable treatment standard and, on theother, the existence of formally identical legal requir ements is not, in itself, conclusive in establishing
conformity with the no less favourable treatment standard.  This was explained in the 1989 Panel
Report on United States – Section 337 of the Tariff Act of 1930  as follows:
"The words 'treatment no less favourable' in paragraph 4 call for effective equality of
opportunities for imported products in respec t of the application of laws, regulations
and requirements affecting the internal sale, offering for sale, purchase, transportation,
distribution or use of products.  This clearl y sets a minimum permissible standard as a
basis.  On the one hand, contracting partie s may apply to imported products different
formal legal requirements if doing so w ould accord imported products more favourable
treatment.  On the other hand, it also has to be  recognised that there may be cases where
                                                     
27 Italian Discrimination against Imported Agricultural Machinery , paras. 11-13, BISD 7S/60, 64,
L/833, adopted on 23 October 1958
28 United States – Taxes on Petroleum and Certain Other Imported Substances , para. 5.1.9,
BISD 34S/136, L/6175, adopted on 17 June 1987
29 United States – Section 337 of the Tariff Act 1930 , para. 5.11, BISD 36S/345, L/6439, adopted on
7 November 1989
30 For example in the Panel Report on Japan – Measures Affecting Consumer Photographic Film and
Paper , para. 10.379, WT/DS44/R
31 For example in its Report on Japan – Taxes on Alcoholic Beverage s II, the Appellate Body stated
that "… Article III protects expectations not of any par ticular trade volume but rather of the equal competitive
relationship between imported and domestic products", p. 27, WT/DS8/AB/R, WT/DS10/AB/R,
WT/DS11/AB/R, adopted on 1 November 1996WT/WGTCP/W/114
Page 9
application of formally identical legal provisions would in practice accord less
favourable treatment to imported products and a contracting party might thus have to
apply different legal provisions to imported products to ensure that the treatment
accorded them is in fact no less favourable.  For these reasons, the mere fact that
imported products are subject under Section 3 37 to legal provisions that are different
from those applying to products of national origin is in itself not conclusive in
establishing inconsistency with Article III:4.  In such cases, it has to be assessed
whether or not such differences in the legal provisions applicable do or do not accord to
imported products less favourable treatment."32
This finding was endorsed by a WTO panel.33
32. This GATT jurisprudence has been reflected in the text of the national treatment provision of
the GATS.  Paragraph 2 of Article XVII explicitly recognizes that the no less favourable treatment
standard may be met by either formally identical or formally different treatment, provided, as made
clear in its paragraph 3, no less favourable conditions of competition are accorded to the services or
service suppliers of other Members.
E. LIKE PRODUCTS , SERVICES AND SERVICE SUPPLIERS
33. In the case of the GATT and the GATS, the no less favourable treatment standard has to be
met in regard, respectively, to "like products" and "like services and service suppliers".
34. The question of what is a like product for the purposes of Article III of the GATT has given
rise to a good deal of attention in dispute settlement panels and the Appellate Body.  This has been,
for the most part, in regard to the interpretation of  Article III:2 concerning internal taxes and other
internal charges.  This discussion has been complicated by the fact that, in addition to the like
products concept, this provision contains, in its interpretative note, the concept of a "directly
competitive or substitutable product";  this has been held to have a broader meaning, for the purposes
of this provision, than a like product.34  The general approach taken by panels has been to emphasize
that the interpretation of the term "like product" should be examined on a case-by-case basis.  Criteriathat have been used in this connection include the products' end-uses in a given market, consumers
tastes and habits, the products' nature and quality and whether the products fall in question under the
same tariff classification.
35  In regard to testing whether products are directly competitive or
substitutable, a recent panel examined evidence of the direct competitive relationship between the
products, including comparisons of their physical characteristics, end-uses, channels of distribution
and prices, taking into account cross-price elasticities, evidence from the markets of other countries
and potential as well as actual competition.36
                                                     
32 United States – Section 337 of the Tariff Act 1930 , para. 5.11, BISD 36S/345, L/6439, adopted on
7 November 1989
33 United States – Standards for Reformulated and Conventional Gasoline , para. 6.25, WT/DS2/R
34 It should be noted that in endorsing this finding, the Appellate Body has emphasized that the scope
of the term "like", which is used in several GATT provisions, must be determined by the particular provision in
which it is found as well as by the context and the circumstances that prevail in any given case to which thatprovision might apply (Report on Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, WT/DS10/AB/R and
WT/DS11/AB/R).
35 See, for example, Report of the Working Party on Border Tax Adjustments , para. 18, BISD 18S/97,
L/3464, adopted on 2 December 1970, and Appellate Body Report on Japan – Taxes on Alcoholic Beverages ,
WT/DS8/AB/R, WT/DS10/AB/R and WT/DS11/AB/R
36 Korea – Taxes on Alcoholic Beverages , pp. 171-192, WT/DS75/RWT/WGTCP/W/114
Page 10
35. Another important issue that has arisen in de termining whether products would be considered
"like" for the purposes of GATT Article III:4 or directly competitive or substitutable for the purposes
of GATT Article III:2, has been whether protective intent is relevant.  Some have taken the view that
this is an important consideration, interpreting th e phrase in Article III:1 enjoining measures being
applied "so as to afford protection to domestic production" in this light.  This view has beeninfluenced by the concern that the designation of imported and domestic products as "like" would
make any regulatory product differentiation inconsistent with Article III, even if employed with
legitimate public policy objectives, such as for environmental or standardization purposes.  They have
thus considered it important that the like product determination be made in such a way that it did not
unnecessarily infringe upon the regulatory authority and domestic policy options of contracting
parties.
37  However, a WTO panel explicitly rejected the taking into account of the legislative
objective of an internal tax when determining the scope of "like products" or "directly competitive or
substitutable products".38  This approach was upheld by the Appellate Body.  Further, in considering
whether a measure has been taken "so as to afford protection to domestic production" in terms of
Article III:2, the Appellate Body ruled that the issue of legislators' or regulators' intent is not a
relevant consideration.  Rather, with respect to tax differentials between domestic and imported
directly competitive or substitutable products, the focus should be on objective factors underlying thetax measure in question, including its design, architecture and revealing structure.
39
F. KEY EXCEPTIONS TO THE PRINCIPLE
36. As outlined above, the scope of the national treatment obligations under the GATT and GATS
is limited in various ways.  In particular, the GATT requirement is limited to "internal" measures and
the corresponding requirement in the GATS is dependent on specific commitments having beenscheduled by the Member concerned.  In addition, there are a number of permissible exceptions to the
national treatment principle under these two Agreements.  Without attempting to be fully
comprehensive and without describing the often complicated experience with their application, the
following exceptions should be noted:
(a) Government procurement of goods and services (Article III:8(a) of the GATT and
Article XIII of the GATS).  However, it should be noted that 25 WTO Members have
made national treatment commitments towa rds each other in respect of a large
proportion of their government procurement of goods and services under the
plurilateral Agreement on Government Procurement.
(b) General exceptions covering such matters as measures necessary to protect public
morals or maintain public order, to protect human, animal, or plant life or health and
to secure compliance with laws and regula tions not inconsistent with the provisions
of the agreement in question (Article XX of GATT and Article XIV of GATS). Such
general exceptions are subject to the requirement that measures taken pursuant to
them are not applied in a manner which would constitute a means of arbitrary or
unjustifiable discrimination between countries where the same (GATT) or like
(GATS) conditions prevail, or a disguised restriction on international trade.  It shouldalso be noted that the area covered by some of these exceptions to the GATT has
                                                     
37 United States – Measures Aff ecting Alcoholic and Malt Beverages , paras. 5.23 to 5.26 and
paras. 5.71 to 5.74, WT/DS23/R and BISD 39S/206, respectively
38 Japan – Taxes on Alcoholic Beverages , paras. 6.15-6.19, WT/DS8/R, WT/DS10/R and WT/DS11/R
39 Appellate Body Report on Japan – Taxes on Alcoholic Beverages , p. 29, WT/DS8/AB/R,
WT/DS10/AB/R and WT/DS11/AB/R.  However, in another case, in concluding that a measure had been taken"so as to afford protection", the Appellate Body relied on, in addition to the magnitude of tax differentials, thefact that the government of the respondent country ha d stated that the objective of the measure was to protect
domestic production (Appellate Body report on Canada – Certain Measures Concerning Periodicals , pp. 30-32,
WT/DS31/AB/R).WT/WGTCP/W/114
Page 11
been regulated in greater detail by the WTO Agreements on Technical Barriers to
Trade and on the Application of Sanitary and Phytosanitary Measures.40  A l s o  i n
regard to domestic regulation, the GATS' Annex on Financial Services allows
exceptions for prudential reasons.
(c) Security exceptions (Article XXI of the GATT and Article XIV bis of the GATS).
37. As mentioned earlier, in terms of the scope of the TRIPS Agreement, the national treatment
obligation in that Agreement is relatively comp rehensive.  However, where exceptions to this
principle have been made under the main pre-existing intellectual property conventions, they are also
permitted under the TRIPS Agreement, for example the so-called "comparison of terms" in the area of
copyright and, subject to some additional safeguards in the TRIPS Agreement, provisions relating to
judicial and administrative procedures in the area of industrial property.  Moreover, in respect of
performers, producers of phonograms and broadcasting organization, the national treatment obligationonly applies in respect of the rights provided under the TRIPS Agreement.
III. THE PRINCIPLE OF MOST-FAVOURED-NATION TREATMENT
A. 
MAIN PROVISIONS IN WHICH THE PRINCIPLE IS FOUND
38. The principle of most-favoured-nation (MFN) treatment is contained in each of the three main
WTO Agreements and is set out in the following provisions:
(i) GATT:  Article I;
(ii) GATS:  Article II;
(iii) TRIPS Agreement:  Article 4.
The text of these provisions is reproduced in Appendix II to this paper.
39. Provisions requiring a WTO Member not to discriminate between other WTO Members can
be found in various of the other agreements relating to trade in goods that form part of Annex IA of
the WTO Agreement.
B. BACKGROUND /PURPOSE OF THIS PRINCIPLE
40. As was mentioned earlier in this note, the focus in the GATT on border measures, together
with its historical background as a replacement for a proliferation of bilateral trading agreements with
a multilateral one, explain why most-favoured-nation treatment is often referred to as the cornerstone
of the GATT.  It serves a central role in ensuring the multilateral nature of the trading system
embodied in the GATT and the multilateral rule of law in this area.  The requirement that any change
be automatically applied to all WTO Members is an important element of stability and predictability
in the system, guaranteeing that all will benefit from trade liberalization measures and making it more
difficult to reverse such measures.  It also has an important element of economic logic in it, enablingeach participating country to satisfy its import needs from the most efficient sources of supply
(maximizing the scope for operation of the principle of comparative advantage).  Furthermore, the
basic rule of non-discrimination that it embodies is perceived to have an important foreign policy
rationale.
                                                     
40 In the event of a conflict with the GATT, the provisions of these Agreements prevail.  General
interpretative note to Annex IA of the Marrakesh Agreement Establishing the World Trade Organization.WT/WGTCP/W/114
Page 12
41. Similar considerations also apply to the other mains areas of the WTO - services and
intellectual property.  However, in these areas, the national treatment principle, actually or potentially,
may be relatively more important.  This is most obvious in the area of the TRIPS Agreement.  In the
pre-existing international intellectual property conventions, notably the Paris and Berne Conventions,
a most-favoured-nation clause had not been considered necessary.  This was because it wasconsidered that the broad scope of the national treatment obligation contained in those Conventions
greatly limited the likelihood that benefits accorded to the nationals of one country would not be
accorded to the nationals of all others:  apart from in the relatively limited areas where exceptions to
national treatment are permitted in these Conventions, such discrimination between the nationals of
other countries would only be possible if a country gives the nationals of another country more
favourable treatment than it accords to its own nati onals.  The origin of the TRIPS MFN clause lay in
the fact that, notwithstanding the inherent unlikeliness of such a course of action, some countries hadtaken measures to do so.  The TRIPS MFN clause was largely motivated by a desire to deal with this
rather exceptional situation.
42. As regards GATS, the potential broad scope of the national treatment commitments, covering
as they may all measures affecting the supply of services (and not just "internal" measures, as in the
GATT), also has implications for the relative importance of the MFN rule.  However, it has, ofcourse, to be recalled and emphasized that national treatment is not a rule of general application in the
GATS but is dependent on a specific sectoral commitment having been made and on any conditions
and qualifications set out therein.
C. 
SCOPE OF THE MFN PRINCIPLE
43. With regard to the beneficiaries of most-favoured-nation treatment, the description of this
matter in relation to national treatment (paragraphs 18-21 above) broadly holds good also for
most-favoured-nation treatment.  However, with respect to the GATT, it should be noted that this
principle must also be applied to exports and any product destined for the territories of other WTO
Members.
44. With regard to the types of measures to which the MFN obligation applies, the description
under national treatment is once more broadly applicable.  However, there is an important additional
area covered in the case of the GATT.  The GATT MFN obligation covers not only the internal taxes
and regulations referred to in the GATT national treatment provision but also border measures.41  In
regard to state enterprises and enterprises enjoying exclusive or special privileges, Article XVII of the
GATT requires that such enterprises shall, in thei r purchases or sales involving either imports or
exports, act in a manner consistent with the general principles of non-discriminatory treatment
described in the GATT for governmental measures affecting imports or exports by private traders.
This is understood to mean that such purchases or sales should be made in accordance with
commercial considerations and that the enterprise s of other contracting parties shall be afforded
adequate opportunity to compete, in accordance with customary business practices.
45. In regard to the GATS, an important difference is that, whereas the national treatment
obligation only applies where a specific commitment has been made, the MFN obligation contained inArticle II is one of general application, albeit subject to a once-off list of exceptions (discussed further
below).  In respect of monopolies and exclusive service suppliers, the provisions of Article VIII
require that any such enterprise, in the supply of a monopoly service in a relevant market, not act in a
manner inconsistent with a Member's MFN obligation.
                                                     
41 That is to say "Customs, duties and charges of any kind imposed on or in connection with
importation or exportation or imposed on the international transfer of payments for imports or exports, and with
respect to the method of levying such duties and charges, and with respect to all rules and formalities in
connection with importation and exportation …".  Article I:1 of the GATT.WT/WGTCP/W/114
Page 13
D. THE MFN STANDARD
46. The standard of most-favoured-nation treatment is described somewhat differently in the three
main WTO Agreements.  The GATT uses traditional language in referring to the obligation to extend
"immediately and unconditionally" to all WTO Members "any advantage, favour, privilege or
immunity" granted by a Member.  A WTO panel has confirmed GATT case law to the effect that anysuch advantage cannot be made conditional on any criterion that is not related to the imported product
itself.
42  The TRIPS Agreement uses the same formulation as the GATT.
47. The GATS uses a "treatment no less favourable" standard for expressing its MFN obligation.
The meaning of this standard was the subject of a finding in the Panel Report on European
Communities – Regime for the Importat ion, Sale and Distribution of Bananas .  The question was
whether the language clarifying the no less favourable treatment standard contained in the GATS
national treatment obligation, in regard to formally  identical or formally different treatment and
conditions of competition (see paragraphs 30 and 32 of this note above), should also be understood to
be relevant to the interpretation of the MFN obligat ion of Article II of the GATS.  The Panel held that
the same broad scope should be given to the "treatment no less favourable" standard in Article II,
which it thus interpreted as requiring no less favourable conditions of competition.43  This result was
essentially upheld by the Appellate Body, although on different grounds.44
E. LIKE PRODUCTS , SERVICES AND SERVICE SUPPLIERS
48. As in the case of the national treatment prov isions of the GATT and the GATS, the basis of
comparison for determining discrimination under their MFN clauses is like products or like services
and service suppliers.  However, it was clear in the drafting of the GATT45, and has been upheld
since, that the expression could have different meanings in the different contexts in which it is used.On the whole, it would seem that GATT panels have tended to adopt a relatively narrow construction
of this term under Article I where tariff issues are concerned.
46  In doing so, they have had greater
regard for the relevance of tariff classification, although this has been treated as not necessarily
dispositive in itself.47  A consideration appears to have been that the issue of how broadly the benefits
from a tariff concession negotiated for a specific product area are construed can have implications forthe incentive to make such commitments.
F. 
KEY EXCEPTIONS TO THE PRINCIPLE
49. There are a number of important exceptions or qualifications to the application of the MFN
principle.  These include the general exceptions and security exceptions discussed above in relation to
national treatment.  In addition, in regard to the GATT, important exceptions to the MFN principle are
permitted for customs unions and free-trade area agreements (Article XXIV), and preferences in
favour of and between developing countries (the Enabling Clause).48
                                                     
42 Indonesia – Certain Measures Affecting the Automobile Industry , paras. 14.143-14.144,
WT/DS54/R, WT/DS55/R, WT/DS59/R and WT/DS64/R
43 WT/DS27/R/USA, paras. 7.298 to 7.304
44 Report of the Appellate Body on European Communities – Regime for the Importation, Sale and
Distribution of Bananas , WT/DS27/AB/R
45 Guide to GATT Law and practice, 1995 Vol. I, p. 35
46 Japan – Tariff on Imports of Spru ce, Pine, Fir Dimension Lumber , BISD 36S/167, L/6470, adopted
on 19 July 1989
47 Spain – Tariff Treatment of Unroasted Coffee , BISD 28S/102, L/5135, adopted on 11 June 1981
48 Decision of 28 November 1979 on "Differential and More Favourable Treatment, Reciprocity and
Fuller Participation of Developing Countries", BISD 26S/203WT/WGTCP/W/114
Page 14
50. Under the GATS, Members are allowed to register a once-off list of exemptions from the
MFN treatment standard.  These exemptions are subjec t to review five years after the entry into force
of the WTO and, in principle, should not exceed a period of ten years.49  The GATS also allows an
exception from MFN treatment for economic integration agreements, subject to certain conditions,
(Article V) and exempts from its rules air transport traffic rights and services directly related to theirexercise as well as measures taken for prudential reasons in the financial services sector.
50
51. The main exceptions to MFN treatment perm itted under the TRIPS Agreement relate to
international agreements on judicial assistance or law enforcement of a general nature and not
particularly confirmed to the protection of intellectual property;  situations where permissible
exceptions to national treatment allow treatment to be accorded on the basis of material reciprocity;
the rights of performers, producers of phonograms and broadcasting organizations not provided in the
Agreement;  and treatment under pre-existing interna tional agreements that have been notified and do
not constitute an arbitrary or unjustifiable discrimination.  Furthermore, an exception is allowed for
international registration systems concluded under the auspices of WIPO.
IV. THE PRINCIPLE OF TRANSPARENCY
A. MAIN PROVISIONS IN WHICH THE PRINCIPLE IS FOUND
52. The concept of transparency as reflected in WTO agreements can be understood as having
two component parts:
(i) the obligation to publish, or at least make publicly available, all relevant regulations,
and, as a general rule, not to apply or enforce them until this has been done.  Often
linked with this are provisions relating to the impartial administration of such
regulations and the right of review of decisions taken under them;  and
(ii) provisions on the notification of various forms of governmental action to the WTO
and other Members.
53. With regard to publication, the provisions of the three main WTO Agreements containing this
obligation are:
(i) GATT:  Article X;(ii) GATS:  Article III;
(iii) TRIPS:  Article 63.
The text of these provisions is reproduced in Appendix III to this paper.
54. Many of the other agreements that make up Annex IA of the WTO Agreement, relating to
trade in goods, also contain a publication obligation.
55. Article X of the GATT also contains provisions on the uniform, impartial and reasonable
administration of trade measures and the right of review of action taken pursuant to them.  Provisions
of this nature can be found in many other WTO Agreements, including the GATS (in particular
Article VI), the TRIPS Agreement (in particular Articles 41-42 and 62) and in various Annex IA
                                                     
49 Most of the exemptions listed are in the areas of maritime, transport and audiovisual services.
50 Annexes to the GATS on Air Transport Services and Financial Services.WT/WGTCP/W/114
Page 15
Agreements, such as those on Subsidies and Countervailing Measures, Anti-Dumping Measures,
Customs Valuation, Import Licensing Procedures and Pre-Shipment Inspection.
56. In regard to notification, the main GATS and TRIPS provisions are those contained in the
Articles referred to above, although in both cases there are other provisions calling for notifications in
particular instances.  The notification provisions contained in the GATT and other agreements relatingto trade in goods are numerous and diverse.  A Secretariat note prepared for the Working Group on
Notification Obligations and Procedures, established pursuant to a Decision taken by the Uruguay
Round Trade Negotiations Committee, lists 165 different notification obligations and procedures in
the trade in goods area.
51  Some of these are of broad application;  for example, most WTO
rules-based agreements require the notification of implementing legislation and any changes to such
legislation.  Some of these provisions call for notifications on a periodic basis, such as biannual
reports on countervailing and anti-dumping actions.  Some notifications only have to be made when aparticular trade action is taken or contemplated, such as a safeguard action.  Still others only have to
be made on a "one-time" basis, for example at the time of the coming into force of the WTO
Agreement.  Apart from such notification provisions, use is also made of other devices for ensuring
that the WTO and its Members have adequate information about the practices of Members;  these
include requirements to make available enquiry or contact points, the possibility for "reverse"notifications to be made by an affected Member about another Member's practices, and obligations to
provide information on request.
B. 
BACKGROUND /PURPOSE OF THIS PRINCIPLE
57. The underlying purpose of these rules can be summarized in four points:
(i) First, to promote a rules-based approach to trade policy and measures at the national
level.  A basic condition for the rule of law in this area is that of publication of all
legal requirements and, wherever possible, their non-enforcement before persons
subject to them have had a chance to become acquainted with them.  The provisions
concerning the impartial administration of such legal requirements and the scope for
review by an independent body of decisions concerning their application also servethis function.
(ii) Second, to provide information to economic actors so that they can take maximum
advantage of the opportunities created by WTO rules and commitments, whether this
concerns market access, protection of intellectual property or other relevant matters.
(iii) Third, to facilitate monitoring of compliance with obligations under the WTO and,
through this means, the avoidance of disputes.
(iv) Fourth, to facilitate future trade negotiations with a view to further liberalization of
international trade.
52
58. While, as stated above, publication and administration provisions serve to foster a rules-based
approach to trade policy, the function of transparency obligations is perhaps relatively most important
in areas where the role of WTO rules of general application is limited.  One such case concerns areas
where the scope for discretionary government measures is large, either because of their actual or
                                                     
51 G/NOP/W/2.  The most recent paper setting out information on compliance with these procedures is
G/L/223/Rev.1 of 27 January 1999.
52 The basic GATT principle that, if protection is to  be accorded, it should take the form of a customs
tariff can be understood to have an important transparency function.  It makes clear and quantifies the margin of
protection given to domestic products.  This not only provides valuable information to actors in the market but
also facilitates negotiations on the reduction of such duties on the basis of reciprocity.WT/WGTCP/W/114
Page 16
potential direct control over specific economic transactions affecting trade, such as in the areas of
government procurement and state trading53, or because national laws of general application allow for
considerable executive discretion in establishing trade measures.54  The second domain that might be
particularly identified in this connection is that of those areas of essentially internal governmental
regulation that have as their principal objects the promotion of legitimate public policy objectives,such as public health or protection of the environment, but where the regulations in question can have
an important impact on the conditions of internat ional competition and, indeed, can be abused with
this objective in mind.  The problem in this area is how to find a proper balance between, on the one
hand, the need to ensure that such policy instruments are not used as disguised restrictions on trade
and, on the other hand, the need for the WTO not to be overly intrusive into areas where trade
considerations are not paramount.  The WTO Agreements on Technical Barriers to Trade and on the
Application of Sanitary and Phytosanitary Measures approach this issue by first providing for somebroad rules of general application, revolving around the concept that regulations should be drawn up
and applied on a national treatment basis and should be no more trade-restrictive than necessary to
fulfill their legitimate objectives, and then putting a great deal of emphasis on transparency, especially
in situations where Members deviate from international standards or where they are not available.  In
such situations, as a general rule, Members are required to provide opportunities for other Membersand interested parties to express their views in ad vance, notably by prior publication and notification
to the WTO of proposals to introduce regulations.
C. T
YPES OF MEASURES TO WHICH THE PRINCIPLE APPLIES
59. The publication obligation in each of the three main WTO Agreements is broad, covering
"laws, regulations, judicial decisions and administrative rulings of general application" pertaining, ineach area, to the full range of issues covered by the agreement in question.  They also include an
obligation to publish relevant international agreements.  Panels and the Appellate Body have
generally taken a liberal interpretation of these elements, emphasizing the duty to provide information
in a comprehensive and timely manner.
55  The Japan – Film  case dealt with a claim regarding an
alleged violation of Article X of the GATT relating to a claimed failure to publish certain enforcementactions taken by the Japan Fair Trade Commission and local fair trade councils as well as
administrative "guidance" given by regional offices of the Ministry of Trade and Industry, prefectural
governmental and local authorities concerning the Large Stores Law and relevant local regulations.  In
reviewing the complaint, the Panel noted that, on th e plain meaning of Article X:1 of the GATT, the
requirement of publication does not extend to administrative rulings addressed to specific individuals
or entities.  It noted further that "inasmuch as the Article X:1 requirement applies to all administrative
                                                     
53 Thus, the plurilateral Agreement on Government Procurement contains detailed provisions for both
ex ante  transparency in regard to procurement opportunities and ex post  transparency in regard to decisions
taken to award procurement contracts as well as provisions  for possible subsequent review at the domestic level.
It also contains significant notification procedures, for example of a statistical nature.  The important role that
transparency can play in this area has also been r ecognized through the establishment of a multilateral work
programme on transparency in government procurement at the 1996 Singapore WTO Ministerial Conference.This work programme is still under way.  The area of state trading is another one where transparency is the
focus of multilateral efforts, notably through the establishment of a Working Party to review notifications and
counter-notifications and make recommendations rega rding the adequacy of the notification obligations.
54 An example of this is the area of import licensing, in particular that of a discretionary nature, which
is the focus of the WTO Agreement on Importing Licensing Procedures.  This has, as one of its principal aims,to ensure that import licensing, particularly non-automa tic import licensing, is implemented in a transparent and
predictable manner.
55 Japan – Trade in Semiconductors,  BISD 35S/116, L/6309, adopted on 4 May 1988, and European
Communities – Measures Affecting the Im portation of Certain Poultry Products,  WT/DS69/AB/RWT/WGTCP/W/114
Page 17
rulings of general application, it should also extend to administrative rulings in individual cases where
such rulings establish or revise principles or criteria applicable in future cases".56
D. KEY EXCEPTIONS TO THE PRINCIPLE
60. The main transparency provisions of the GATT, GATS and TRIPS Agreement contain
exceptions making it clear that Members are not required to disclose confidential information whichwould impede law enforcement or otherwise be contrary to the public interest, or which would
prejudice legitimate commercial interests of particular enterprises, public or private.
57  Similar clauses
are to be found in many of the other WTO agreements that form part of Annex IA of the WTO
Agreement.
                                                     
56 Japan – Measures Affecting Consumer Photographic Film & Paper , para. 10.388, WT//DS44/R
57 GATT Article X:1, GATS Article III bis and TRIPS Article 63.4WT/WGTCP/W/114
Page 18
APPENDIX I
Main Provisions Relevant to the Principle of National Treatment
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
Article III*
National Treatment on Internal Taxation and Regulation
1. The contracting parties recognize that internal  taxes and other internal charges, and laws,
regulations and requirements affecting the internal  sale, offering for sale, purchase, transportation,
distribution or use of products, and internal quantitative regulations requiring the mixture, processing or
use of products in specified amounts or proportions , should not be applied to imported or domestic
products so as to afford protection to domestic production.*
2. The products of the territory of any contractin g party imported into the territory of any other
contracting party shall not be subject, directly or indi rectly, to internal taxes or other internal charges of
any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no
contracting party shall otherwise apply internal taxe s or other internal charges to imported or domestic
products in a manner contrary to the principles set forth in paragraph 1.*
3. With respect to any existing internal tax wh ich is inconsistent with the provisions of
paragraph 2, but which is specifically authorized under a trade agreement, in force on April 10, l947, in
which the import duty on the taxed product is bound against increase, the contracting party imposing the
tax shall be free to postpone the application of the provisions of paragraph 2 to such tax until such timeas it can obtain release from the obligations of such  trade agreement in order to permit the increase of
such duty to the extent necessary to compensate for the elimination of the protective element of the tax.
4. The products of the territory of any contractin g party imported into the territory of any other
contracting party shall be accorded treatment no less favourable than that accorded to like products of
national origin in respect of all laws, regulations a nd requirements affecting their internal sale, offering
for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent
the application of differential internal trans portation charges which are based exclusively on the
economic operation of the means of transpor t and not on the nationality of the product.
5. No contracting party shall establish or maintain  any internal quantitative regulation relating to
the mixture, processing or use of products in sp ecified amounts or proportions  which requires, directly
or indirectly, that any specified amount or propor tion of any product which is the subject of the
regulation must be supplied from domestic sources . Moreover, no contracting party shall otherwise
apply internal quantitative regulations in a manner contrary to the principles set forth in paragraph 1.
*
6. The provisions of paragraph 5 shall not apply to any internal quantitative regulation in force inthe territory of any contracting party on July 1, 1939, April 10, 1947, or March 24, l948, at the option of
that contracting party; Provided  that any such regulation which is contrary to the provisions of
paragraph 5 shall not be modified to the detriment of imports and shall be treated as a customs duty for
the purpose of negotiation.
                                                     
* Asterisks mark portions of the various provisions which should be read in conjunction with notes and
supplementary provisions in Annex I of the Agreement (these are not reproduced here).WT/WGTCP/W/114
Page 19
7. No internal quantitative regulation relating to  the mixture, processing or use of products in
specified amounts or proportions shall be applied in such a manner as to allocate any such amount or
proportion among external sources of supply.
8. ( a) The provisions of this Article shall not apply to laws, regulations or requirements
governing the procurement by governmental agenci es of products purchased for governmental purposes
and not with a view to commercial resale or w ith a view to use in the production of goods for
commercial sale.
(b) The provisions of this Article shall not prevent the payment of subsidies exclusively to
domestic producers, including payments to domestic  producers derived from the proceeds of internal
taxes or charges applied consistently with the provisions of this Article and subsidies effected throughgovernmental purchases of domestic products.
9. The contracting parties recognize that internal maximum price control measures, even though
conforming to the other provisions of this Article , can have effects prejudicial to the interests of
contracting parties supplying imported products. A ccordingly, contracting parties applying such
measures shall take account of the interests of exporti ng contracting parties with a view to avoiding to
the fullest practicable extent such prejudicial effects.
10. The provisions of this Article shall not pr event any contracting party from establishing or
maintaining internal quantitative re gulations relating to exposed cinematograph films and meeting the
requirements of Article IV.
GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
Article XVII
National Treatment
1. In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out
therein, each Member shall accord to services and se rvice suppliers of any other Member, in respect of
all measures affecting the supply of services, treatmen t no less favourable than th at it accords to its own
like services and service suppliers.
58
2. A Member may meet the requirement of paragraph 1 by according to services and service
suppliers of any other Member, either formally identi cal treatment or formally different treatment to that
it accords to its own like services and service suppliers.
3. Formally identical or formally different treatmen t shall be considered to be less favourable if it
modifies the conditions of competition in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other  Member.
                                                     
58 Specific commitments assumed under this Article shall not be construed to require any Member to
compensate for any inherent competitive disadvantages which result from the foreign character of the relevant
services or service suppliers.WT/WGTCP/W/114
Page 20
AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL
PROPERTY RIGHTS (TRIPS)
Article 3
National Treatment
1. Each Member shall accord to the nationals of  other Members treatment no less favourable than
that it accords to its own nationals with regard to the protection59 of intellectual property, subject to the
exceptions already provided in, respectively, the Paris Convention (1967), th e Berne Convention (1971),
the Rome Convention or the Treaty on Intellectual Prope rty in Respect of Integrated Circuits.  In respect
of performers, producers of phonograms and broadcastin g organizations, this obligation only applies in
respect of the rights provided under this Agreemen t.  Any Member availing itself of the possibilities
provided in Article 6 of the Berne Convention (1971)  or paragraph 1(b) of Article 16 of the Rome
Convention shall make a notification as foreseen  in those provisions to the Council for TRIPS.
2. Members may avail themselves of the exceptions permitted under paragraph 1 in relation to
judicial and administrative procedures, including the designation of an address for service or the
appointment of an agent within the jurisdiction of  a Member, only where such exceptions are necessary
to secure compliance with laws and regulations whic h are not inconsistent with the provisions of this
Agreement and where such practices are not applie d in a manner which would constitute a disguised
restriction on trade.
                                                     
59 For the purposes of Articles 3 and 4, "protection" shall in clude matters affecting the availability, acquisition, scope,
maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property
rights specifically addressed in this Agreement.WT/WGTCP/W/114
Page 21
APPENDIX II
Main Provisions Relevant to the Principle of Most-Favoured-Nation Treatment
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
Article I
General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in connection with
importation or exportation or imposed on the internati onal transfer of payments for imports or exports,
and with respect to the method of levying such duties and charges, a nd with respect to all rules and
formalities in connection with importation and exportation, and with respect to all matters referred to in
paragraphs 2 and 4 of Article III,* any advantage, favour, privilege or immunity granted by any
contracting party to any product originating in or  destined for any other country shall be accorded
immediately and unconditionally to the like product origin ating in or destined for the territories of all
other contracting parties.
2. The provisions of paragraph 1 of this Article shall not require the elimination of any preferences
in respect of import duties or charges which do not ex ceed the levels provided for in paragraph 4 of this
Article and which fall within the following descriptions:
(a) Preferences in force exclusively between two or more of the territories listed in
Annex A, subject to the conditions set forth therein;
(b) Preferences in force exclusively between two or more territories which on
July 1, 1939, were connected by common so vereignty or relations of protection or
suzerainty and which are listed in Annexes B, C and D, subject to the conditions set
forth therein;
(c) Preferences in force exclusively between the United States of America and the
Republic of Cuba;
(d) Preferences in force exclusively between  neighbouring countries listed in Annexes E
and F.
3. The provisions of paragraph 1 shall not apply to preferences between the countries formerly a
part of the Ottoman Empire and detached from it on July 24, l923, provided such preferences are
approved under paragraph 5† of Article XXV, which shall be applied in this respect in the light of
paragraph 1 of Article XXIX.
4. The margin of preference* on any product in respect of which a preference is permitted under
paragraph 2 of this Article but is not  specifically  set forth as a maximum margin of preference in the
appropriate Schedule annexed to this Agreement shall not exceed:
                                                     
* Asterisks mark portions of the various provisions which should be read in conjunction with notes and
supplementary provisions in Annex I of the Agreement (these are not reproduced here).
† The authentic text erroneously reads "sub-paragraph 5 ( a)".WT/WGTCP/W/114
Page 22
(a) in respect of duties or charges on any product described in such Schedule, the
difference between the most-favoured-nation and preferential rates provided for
therein; if no preferential rate is provided  for, the preferential rate shall for the
purposes of this paragraph be taken to be that in force on April 10, l947, and, if no
most-favoured-nation rate is provided for,  the margin shall not exceed the difference
between the most-favoured-nation and preferential rates existing on April 10, 1947;
(b) in respect of duties or charges on any product not described in the appropriate
Schedule, the difference between the most-favoured-nation and preferential rates
existing on April 10, 1947.
In the case of the contracting parties named in Annex G, the date of April  10, 1947, referred to in
sub-paragraph ( a) and ( b) of this paragraph shall be replaced by the respective dates set forth in that
Annex.
GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
Article II
Most-Favoured-Nation Treatment
1. With respect to any measure covered by  this Agreement, each Member shall accord
immediately and unconditionally to services and serv ice suppliers of any other Member treatment no
less favourable than that it accords to like services and service suppliers of any other country.
2. A Member may maintain a measure inconsistent with paragraph 1 provided that such a measure
is listed in, and meets the conditions of, the Annex on Article II Exemptions.
3. The provisions of this Agreement shall not be so construed as to prevent any Member from
conferring or according advantages to adjacent coun tries in order to facilitate exchanges limited to
contiguous frontier zones of services that are both locally produced and consumed.
AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL
PROPERTY RIGHTS (TRIPS)
Article 4
Most-Favoured-Nation Treatment
With regard to the protection of intellectual property, any advantage, favour, privilege or
immunity granted by a Member to the nationals of any other country shall be accorded immediately and
unconditionally to the nationals of all other Memb ers.  Exempted from this obligation are any
advantage, favour, privilege or immunity accorded by a Member:
(a) deriving from international agreements on judicial assistance or law enforcement of a
general nature and not particularly confined  to the protection of intellectual property;
(b) granted in accordance with the provisions  of the Berne Convention (1971) or the Rome
Convention authorizing that the treatmen t accorded be a function not of national
treatment but of the treatment accorded in another country;WT/WGTCP/W/114
Page 23
(c) in respect of the rights of performers, producers of phonograms and broadcasting
organizations not provided under this Agreement;
(d) deriving from international agreements rela ted to the protection of intellectual property
which entered into force prior to the entry into force of the WTO Agreement, provided
that such agreements are notified to the Council for TRIPS and do not constitute an
arbitrary or unjustifiable discriminati on against nationals of other Members.WT/WGTCP/W/114
Page 24
APPENDIX III
Main Provisions Relevant to the Principle of Transparency
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
Article X
Publication and Administra tion of Trade Regulations
1. Laws, regulations, judicial decisions and admi nistrative rulings of general application, made
effective by any contracting party, pertaining to the classification or the valuation of products for
customs purposes, or to rates of duty, taxes or ot her charges, or to requirements, restrictions or
prohibitions on imports or exports or  on the transfer of payments therefor, or affecting their sale,
distribution, transportation, insurance, warehousing in spection, exhibition, proce ssing, mixing or other
use, shall be published promptly in such a manner as to enable governments and traders to become
acquainted with them. Agreements affecting international trade polic y which are in force between the
government or a governmental agency of any contracting party and the government or governmental
agency of any other contracting party shall also be published. The provisions of this paragraph shall not
require any contracting party to disclose confiden tial information which would impede law enforcement
or otherwise be contrary to the public interest or  would prejudice the legitimate commercial interests of
particular enterprises, public or private.
2. No measure of general application taken by any contracting party effecting an advance in a rate
of duty or other charge on imports under an establ ished and uniform practice, or imposing a new or
more burdensome requirement, restriction or prohib ition on imports, or on the transfer of payments
therefor, shall be enforced before such measure has been officially published.
3. ( a) Each contracting party shall administer in a uniform, impartial and reasonable manner
all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.
(b) Each contracting party shall maintain, or institute as soon as practicable, judicial,
arbitral or administrative tribunals  or procedures for the purpose, inter alia , of the prompt review and
correction of administrative action relating to cust oms matters. Such tribunals or procedures shall be
independent of the agencies entrusted with admi nistrative enforcement and their decisions shall be
implemented by, and shall govern the practice of, such agencies unless an appeal is lodged with a court
or tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by importers;
Provided  that the central administration of such agency may take steps to obtain a review of the matter
in another proceeding if there is good cause to believ e that the decision is inconsistent with established
principles of law or the actual facts.
(c) The provisions of sub-paragraph ( b) of this paragraph shall not require the elimination
or substitution of procedures in force in the territory  of a contracting party on the date of this Agreement
which in fact provide for an objective and impar tial review of administrative action even though such
procedures are not fully or formally independent  of the agencies entrusted with administrative
enforcement. Any contracting party employing su ch procedures shall, upon request, furnish the
CONTRACTING PARTIES  with full information thereon in orde r that they may determine whether such
procedures conform to the requirements of this sub-paragraph.WT/WGTCP/W/114
Page 25
GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
Article III
Transparency
1. Each Member shall publish promptly and, except in  emergency situations, at the latest by the
time of their entry into force, all relevant measures of general application which pertain to or affect the
operation of this Agreement.  International agreements  pertaining to or affecting trade in services to
which a Member is a signatory shall also be published.
2. Where publication as referred to in paragraph 1 is not practicable, such information shall be
made otherwise publicly available.
3. Each Member shall promptly and at least annua lly inform the Council for Trade in Services of
the introduction of any new, or any changes to exis ting, laws, regulations or administrative guidelines
which significantly affect trade in services cove red by its specific commitments under this Agreement.
4. Each Member shall respond promptly to all requests by any other Member for specific
information on any of its measures of general app lication or international agreements within the
meaning of paragraph 1.  Each Member shall also establish one or more enquiry points to provide
specific information to other Members, upon request, on a ll such matters as well as those subject to the
notification requirement in paragraph 3.  Such enquiry  points shall be establis hed within two years from
the date of entry into force of the Agreement Establis hing the WTO (referred to in this Agreement as the
"WTO Agreement").  Appropriate flexibility with respect  to the time-limit with in which such enquiry
points are to be established may be agreed upon fo r individual developing country Members.  Enquiry
points need not be depositories of laws and regulations.
5. Any Member may notify to the Council for Trade in Services any measure, taken by any other
Member, which it considers affects the operation of this Agreement.
AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL
PROPERTY RIGHTS (TRIPS)
Article 63
Transparency
1. Laws and regulations, and final judicial deci sions and administrative rulings of general
application, made effective by a Member pertaini ng to the subject matter of this Agreement (the
availability, scope, acquisition, enforcement and preven tion of the abuse of intellectual property rights)
shall be published, or where such publication is not practicable made publicly available, in a national
language, in such a manner as to enable governments and right holders to become acquainted with them.Agreements concerning the subject matter of this Agreement which are in force between the government
or a governmental agency of a Member and the go vernment or a governmental agency of another
Member shall also be published.
2. Members shall notify the laws and regulations referred to in paragraph 1 to the Council for
TRIPS in order to assist that Counc il in its review of the operation of this Agreement.  The Council shall
attempt to minimize the burden on Members in carryin g out this obligation and may decide to waive the
obligation to notify such laws and regulations directly  to the Council if consulta tions with WIPO on the
establishment of a common register containing these laws and regulations are successful.  The CouncilWT/WGTCP/W/114
Page 26
shall also consider in this connection any acti on required regarding notifications pursuant to the
obligations under this Agreement stemming from the provisions of Article 6 ter of the Paris
Convention (1967).
3. Each Member shall be prepared to supply, in response to a written request from another
Member, information of the sort referred to in paragraph 1.  A Member, having reason to believe that a
specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual
property rights affects its rights under this Agreemen t, may also request in writing to be given access to
or be informed in sufficient detail of such specific j udicial decisions or administrative rulings or bilateral
agreements.
4. Nothing in paragraphs 1, 2 and 3 shall require  Members to disclose confidential information
which would impede law enforcement or otherwise be contrary to the public interest or would prejudice
the legitimate commercial interests of particular enterprises, public or private.
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