Modification of the Conditions of Competition: Has 'Treatment No Less Favourable' Lost its Meaning?

Abstract

The less favourable treatment (LFT) condition is a cornerstone of international trade law and is found in national treatment obligations that apply to both trade in goods (Articles III:4 GATT 1994 and 2.1 TBT Agreement) and trade in services (Article XVII GATS). In the case law, the LFT obligation focuses on whether the measure at issue results in a modification of the conditions of competition (MoCC) of the imported product or service (supplier) vis-à-vis the domestic product or service (supplier). Considering the difference in wording between the various national treatment provisions, and by adopting a comparative historical perspective, this paper analyses the GATT, TBT and GATS case law on MoCC, culminating for now in the Appellate Body report in EC – Seal Products, with the objective of identifying a common standard in the interpretation of LFT.

Keywords: LFT, modification of the conditions of competition, national treatment, less favourable treatment, WTO, non-discrimination

JEL Classification: K33