Enabling clause
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
The Enabling Clause is a 1979 GATT decision. It gives the legal basis for rich countries to give developing countries non-reciprocal preferences, meaning better terms without asking for anything in return. Normally the WTO's most-favoured-nation (MFN) rule requires a country to treat all members equally. The Enabling Clause is a permanent exception to that rule for developing countries. It covers the Generalised System of Preferences (GSP), preferences for LDCs, and trade deals among developing countries.
Example
Under GSP, which rests on the Enabling Clause, the US let many Indian goods in at low or zero duty without asking India to cut its own tariffs. The US withdrew India's GSP benefits in June 2019. India's own duty-free scheme for LDCs (DFTP, 2008) also works within this framework.
Don't confuse with
- GATT Art. XXIV: Art. XXIV allows reciprocal FTAs and customs unions as an MFN exception. The Enabling Clause covers non-reciprocal and developing-country preferences.
Related concepts
- Multilateral trade agreements
- Rule-based trading regime
- Multilateralism
- Plurilateral agreement
- Non-discrimination principle
- Most-favoured-nation principle
- National treatment
- Exceptions to MFN
- Generalised System of Preferences
- Duty-free quota-free market access