What Is National Treatment?

Pablo Garcia
Pablo Garcia
Man with hands on his hips
Man with hands on his hips

National treatment means giving the imports of other countries the same treatment as the domestic goods of one’s own nationals. This trade principal is used by the World Trade Organization (WTO) in all trade agreements of its members. It is applied in various trade agreements to foreign and domestic goods and services, trademarks, patents and copyrights.

Under the General Agreement on Tariffs and Trade (GATT), internal taxes and charges on imported goods must be applied in the same way they are to domestic goods. Laws, regulations, and requirements for the sale and purchase of domestic goods can be no less favorable for imported goods. National treatment only applies once a product has entered the receiving country’s market. Thus, the charging of customs duties on imports is not considered unfavorable treatment even if domestic products are not charged an equivalent local tax.

The General Agreement on Trade in Services (GATS) requires that member countries give the same treatment to foreign services and service providers as that given to their own national providers. Even treating all other member countries identically to each other but differently from one’s own is considered unfavorable treatment. The Trade Related Aspects of Intellectual Property (TRIPS) agreement mandates national treatment for trademarks, patents and copyrights. Intellectual property can be treated no less favorably than that owned by nationals. Exceptions are provided for specific provisions of previous international conventions on intellectual property, such as the Paris Convention (1967) and the Berne Convention (1971).

Most favored nation status is similar in intent to national treatment. Although the term "most favored nation" may sound discriminatory, it is not. It means treating all member countries equally, and the principles of most favored nation are incorporated in the GATTS, GATT, and TRIPS agreements. Under WTO agreements, a member country cannot ordinarily discriminate between trading partners. If special trade considerations are given to some members, they must be given to all.

There are exceptions to most favored national treatment. For example, countries can set up a free trade agreement that applies only to goods traded within the group, which in effect discriminates against goods outside the group. A member country may also give special market access to developing countries. A country that considers specific countries to be trading products unfairly can raise barriers to the importation of those products.

The intent of most favored nation and national treatment is to ensure equal conditions for global trade. WTO believes that their rules promote open, fair, and undistorted competition. They also allow the most developed countries to import products from the least developed countries. Lesser-developed countries then have the opportunity to make inroads into the global market.

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