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World Trade Organization Toolkit : Non-Discrimination Principles

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(b) National Treatment principle

The principle of National Treatment set out in Article III GATT addresses another form of discrimination, namely that between imported and locally-produced goods. Article III requires that imported and locally-produced goods be treated equally. In other words, Members are prevented from adopting internal or domestic policies designed to favour their domestic producers vis-à-vis foreign producers of a given product, even though the latter may all be treated in a uniform way.

Article III:2 GATT concerns tax rules. It requires that internal taxes on imported products shall not be in excess of those applied to domestic goods. Article III:4 GATT imposes nearly the same obligation with respect to regulations and requirements affecting the internal sale of imported products. It provides that the products of the territory of any Contracting Party imported into the territory of another Contracting Party shall be accorded treatment no less favourable than that accorded to like products of national origin, in respect of all laws, regulations and requirements affecting their internal sale.

The idea is that barriers to trade may exist not only as a result of practices at borders but also as a result of internal measures which discriminate between domestic and imported products.

The specific application of the National Treatment principle to given situations has been the source of a number of important GATT and WTO disputes, relating to the fact that a domestic law, regulation or administrative policy which may be neutral on the face of it, nevertheless has either the intent or effect of imposing differential burdens on foreign exporters. This is referred to as de facto discrimination.

In specific circumstances, WTO Members are allowed to derogate from the National Treatment principle. One important exception that may be brought to the National Treatment principle is included in Article XX GATT which allows Members to adopt measures inconsistent with the GATT, including the National Treatment requirement provided that these measures are intended to protect legitimate interests as laid down in Article XX GATT, such as health; and that the said measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the countries where the same conditions prevail or constitute a disguised restriction on international trade.

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