Decline of the Principle of Equal Treatment in the Global Economy

The framework of international trade that regulates towards multilateral agreements and universality, as created by the GATT and the WTO, was based upon the principle of equal treatment. The technique for the legal implementation of this principle is the most favored nation treatment (invented a long time ago), was not only made multilateral, but also elevated – albeit with some exceptions – to be a general rule of GATT. Over the decades the regulation has been continually expanding and gaining depth and has become increasingly free as a part of the globalization process. However, about fifteen years ago this development came to a standstill becoming a victim of its own success. Besides numerous economic and political factors one reason for this slowing down was that the principle of equal treatment and the technique for its legal implementation became increasingly subordinate. Since one of the main pillars of the system was weakened, the whole system was put at risk. At first the most favored nation treatment became an exception instead of a fundamental principle. Then the exception was applied in an ever-widening scope, which created a new system based upon a wide network of bilateral and regional free trade and preferential agreements. This caused the deterioration of the originally intended universalism and the very fragmentation of the global regulatory framework. The achievements of the multilateral regulation of world trade must be preserved, while recognizing the fact that the global system is far less uniform and homogenous than is frequently believed and that the economic, political, cultural and civilizational differences demonstrate even in the field of legal rules and regulations that the world is not as flat as it may appear.*

Journal of Economic Literature (JEL) code: F13 – Trade Policy; International Trade

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