Non-discrimination principle

Indian Economy glossary

Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

Non-discrimination is a core WTO principle. It has two parts:

  • Most-favoured-nation (MFN) treatment (GATT Art. I): any trade advantage given to one member must be given "immediately and unconditionally" to all members.
  • National treatment (Art. III): once imported goods, services or IP are inside the market, they must be treated no less favourably than local ones.

The rule has exceptions. These include FTAs, the Enabling Clause (1979) for developing countries, trade remedies, and the general and security exceptions.

Example

In US v India (DS456), India's National Solar Mission required solar cells and modules to be made in India. The WTO Appellate Body ruled in 2016 that this broke national treatment (GATT Art. III) and the TRIMS Agreement, because it favoured domestic goods over imported ones.

Don't confuse with

  • MFN alone: MFN covers only equal treatment among foreign partners. Non-discrimination also covers imports versus domestic goods, which is national treatment.

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