Analysis of MFN Exemption in WTO/GATS

Abstract

MFN is one of the fundamental principles of any multilateral agreement. GATS, however, allowed derogation from this principle, considering the complexity of services trade and the time constraint for UR negotiation. This derogation was supposed to be of temporary in nature, with a duration of 10 years. But many, if not all, members took advantage of this loophole, and used this exemption as a strategic weapon during the UR and subsequent negotiations. Closer look at the current MFN exemption measures show that the more a member committed; he more a member’s economy is developed; and the more a member is engaged in services trade, the more exemptions were listed. Moreover, many exemptions did not specify the duration, condition, and special treatment of MFN inconsistent measures. Some measures even undermine the specific commitments made in their schedule. The most appropriate way to bring these measures would be through the voluntary elimination, and if that is not possible, then by negotiation during the DDA negotiation.