Editing World Trade Organization (section)

==Principles of the trading system== <!-- "WTO terms" redirects here. If changing this section name, please update that redirect. -->
The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of "trade policy". Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:
# '''Non-discrimination'''. It has two major components: the [[most favored nation]] (MFN) treatment and the [[national treatment]]. Both are embedded in the main WTO agreements on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e., a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members.<ref name=" H42">B. Hoekman, ''The WTO: Functions and Basic Principles'', 42</ref> "Grant someone a special favor and you have to do the same for all other WTO members."<ref name="PT">[http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#seebox Principles of the Trading System] {{Webarchive|url=https://web.archive.org/web/20041211091642/http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#seebox |date=11 December 2004 }}, WTO official site</ref> Some exceptions exist, such as when states participate in a free trade agreement or for preferential treatment given to developing countries.<ref>{{Cite web |title=WTO {{!}} Understanding the WTO - principles of the trading system |url=https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm |access-date=2024-05-08 |website=www.wto.org |language=en}}</ref> National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle [[non-tariff barriers to trade]] (e.g. technical standards, security standards et al. discriminating against imported goods).<ref name="H42"/>
# '''Reciprocity'''. It reflects both a desire to limit the scope of [[Free rider problem|free-riding]] that may arise because of the MFN rule and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from [[unilateralism|unilateral]] liberalization; reciprocal concessions intend to ensure that such gains will materialize.<ref name="H43">B. Hoekman, ''The WTO: Functions and Basic Principles'', 43</ref>
# '''Binding and enforceable commitments'''. The [[tariff]] commitments made by WTO members in multilateral trade negotiation and on accession are enumerated in a [[legal instrument]] known as a schedule (list) of concessions.<ref>WTO, [https://www.wto.org/english/tratop_e/schedules_e/goods_schedules_e.htm Schedules of concessions] {{Webarchive|url=https://web.archive.org/web/20240214033012/https://www.wto.org/english/tratop_e/schedules_e/goods_schedules_e.htm |date=14 February 2024 }}, accessed 10 January 2022</ref> These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.<ref name="PT"/><ref name="H43"/>
# '''Transparency'''. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the [[Trade Policy Review Mechanism]] (TPRM).<ref name=" H44">B. Hoekman, ''The WTO: Functions and Basic Principles'', 44</ref> The WTO system also tries to improve predictability and stability, discouraging the use of [[Import quota|quotas]] and other measures used to set limits on quantities of imports.<ref name="PT"/>
# '''Safety values'''. In specific circumstances, governments are able to [[Trade restriction|restrict trade]]. The WTO's agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health.<ref name="wto.org">{{cite web|url=https://www.wto.org/english/thewto_e/whatis_e/what_stand_for_e.htm|title=WTO – What is the WTO? – What we stand for|website=www.wto.org|access-date=28 March 2019|archive-url=https://web.archive.org/web/20190606054009/https://www.wto.org/english/thewto_e/whatis_e/what_stand_for_e.htm|archive-date=6 June 2019|url-status=live}}</ref>
There are three types of provision in this direction:
# Articles allowing for the use of trade measures to attain non-economic objectives.
# Articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies.<ref name="wto.org"/><ref>Farah, Paolo Davide and Cima, Elena, World Trade Organization, Renewable Energy Subsidies and the Case of Feed-In Tariffs: Time for Reform Toward Sustainable Development? (1 December 2015). Georgetown International Environmental Law Review (GIELR), Vol. 27, No. 1, 2015. Available at SSRN: http://ssrn.com/abstract=2704398 {{Webarchive|url=https://web.archive.org/web/20230107185915/https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2704398 |date=7 January 2023 }}</ref>
# Provisions permitting intervention in trade for economic reasons.<ref name="H44"/>

Exceptions to the MFN principle also allow for preferential treatment of [[Developing country|developing countries]], regional [[free trade area]]s and [[customs union]]s.<ref name=underst/>{{rp|fol.93}}