National Treatment in the GATT

43 Pages Posted: 25 Apr 2006

See all articles by Henrik Horn

Henrik Horn

Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Date Written: January 2006

Abstract

The National Treatment clause (NT) is the first-line defence in the GATT (and in most other trade agreements) against opportunistic exploitation of the inevitable incompleteness of the agreement. This paper examines the role of NT as it applies to internal taxation under the GATT. It is shown that despite severely restricting the freedom to set internal taxes, NT may improve government welfare. But it will not completely solve the incomplete contract problem it is meant to remedy. Furthermore, it requires a high degree of economic sophistication on behalf of trade negotiators in order for this beneficial effect to materialize.

Keywords: National Treatment, non-discrimination, trade agreement, GATT, WTO

JEL Classification: F13

Suggested Citation

Horn, Henrik, National Treatment in the GATT (January 2006). CEPR Discussion Paper No. 5450, Available at SSRN: https://ssrn.com/abstract=898900

Henrik Horn (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.econ-law.se

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://www.econ-law.se

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