Rule-based trading regime
Also called: Rules-based trade · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Class 11, Ch 3 "Liberalisation, Privatisation and Globalisation: An Appraisal"
Meaning
A rule-based trading regime is a trading system in which countries follow agreed rules and "cannot place arbitrary restrictions on trade". NCERT (Class 11) lists it as a WTO objective. Clear rules make trade predictable. Disputes are settled by a legal process under WTO dispute settlement, not by raw power. The system has been weakened because the WTO Appellate Body has not worked since 11 December 2019.
Example
India kept about 2,700 tariff lines under quantitative restrictions (direct limits on import quantities), which it justified by balance-of-payments problems. The US challenged these in DS90, and India lost in 1999. India followed the ruling and removed the restrictions by 1 April 2001.
Don't confuse with
- Free trade: this means trade with no barriers at all. A rule-based regime still allows tariffs and other measures, as long as they follow the agreed rules.
Related concepts
- Multilateral trade agreements
- Multilateralism
- Plurilateral agreement
- Non-discrimination principle
- Most-favoured-nation principle
- National treatment
- Exceptions to MFN
- Enabling clause
- Generalised System of Preferences
- Duty-free quota-free market access