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National Treatment in the GATT

Author

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  • Horn, Henrik

    () (The Research Institute of Industrial Economics)

Abstract

The National Treatment clause (NT) is the first-line defense 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.

Suggested Citation

  • Horn, Henrik, 2006. "National Treatment in the GATT," Working Paper Series 657, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0657
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    References listed on IDEAS

    as
    1. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 519-562.
    2. Henrik Horn, 2006. "National Treatment in the GATT," American Economic Review, American Economic Association, vol. 96(1), pages 394-404, March.
    3. Pierpaolo Battigalli & Giovanni Maggi, 2003. "International agreements on product standards: an incomplete-contracting theory," Working Papers 229, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    4. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    5. Brian R. Copeland, 1990. "Strategic Interaction among Nations: Negotiable and Non-negotiable Trade Barriers," Canadian Journal of Economics, Canadian Economics Association, vol. 23(1), pages 84-108, February.
    6. Josh Ederington, 2001. "International Coordination of Trade and Domestic Policies," American Economic Review, American Economic Association, vol. 91(5), pages 1580-1593, December.
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    Cited by:

    1. Costinot, Arnaud, 2008. "A comparative institutional analysis of agreements on product standards," Journal of International Economics, Elsevier, vol. 75(1), pages 197-213, May.
    2. Horn, Henrik & Mavroidis, Petros C., 2008. "The Permissible Reach of National Environmental Policies," Working Paper Series 739, Research Institute of Industrial Economics, revised 20 Jun 2008.
    3. Grossman, Gene M. & Horn, Henrik & Mavroidis, Petros C., 2012. "The Legal and Economic Principles of World Trade Law: National Treatment," Working Paper Series 917, Research Institute of Industrial Economics.
    4. Joseph Francois & Ian Wooton, 2010. "Market Structure and Market Access," The World Economy, Wiley Blackwell, vol. 33(7), pages 873-893, July.
    5. Daniel Becker & Magdalena Brzeskot & Wolfgang Peters & Ulrike Will, 2013. "Grenzausgleichsinstrumente bei unilateralen Klimaschutzmaßnahmen. Eine ökonomische und WTO-rechtliche Analyse," ZfU - Zeitschrift für Umweltpolitik und Umweltrecht, RECAP15, European University Viadrina, Frankfurt (Oder), vol. 36(3), pages 339-373, September.
    6. Ralph Ossa, 2011. "A "New Trade" Theory of GATT/WTO Negotiations," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 122-152.
    7. Doi, Naoshi & Ohashi, Hiroshi, 2017. "Empirical analysis of the national treatment obligation under the WTO: The case of Japanese shochu," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 43-52.
    8. Henrik Horn & Giovanni Maggi & Robert W. Staiger, 2010. "Trade Agreements as Endogenously Incomplete Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 394-419, March.
    9. Henrik Horn, 2006. "National Treatment in the GATT," American Economic Review, American Economic Association, vol. 96(1), pages 394-404, March.
    10. Horn, Henrik, 2009. "The Burden of Proof in National Treatment Disputes and the Environment," Working Paper Series 791, Research Institute of Industrial Economics.
    11. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    12. Horn, Henrik, 2011. "The burden of proof in trade disputes and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 15-29, July.
    13. Horn, Henrik & Mavroidis, Petros C., 2009. "Burden of Proof in Environmental Disputes in the WTO: Legal Aspects," Working Paper Series 793, Research Institute of Industrial Economics.
    14. Sergei Guriev & Mikhail Klimenko, 2015. "Duration and Term Structure of Trade Agreements," Economic Journal, Royal Economic Society, vol. 125(589), pages 1818-1849, December.
    15. Difei Geng & Kamal Saggi, 2013. "The case for non-discrimination in the international protection of intellectual property," Vanderbilt University Department of Economics Working Papers 13-00017, Vanderbilt University Department of Economics.
    16. Horn, Henrik & Tangerås, Thomas, 2016. "Economics and Politics of International Investment Agreements," Working Paper Series 1140, Research Institute of Industrial Economics.
    17. repec:eee:worbus:v:53:y:2018:i:2:p:164-176 is not listed on IDEAS
    18. Alexander Keck, 2004. "WTO Dispute Settlement: What Role for Economic Analysis? A Commentary on Fritz Breuss," Journal of Industry, Competition and Trade, Springer, vol. 4(4), pages 365-371, December.
    19. Henrik Horn & Petros C. Mavroidis, 2014. "Multilateral environmental agreements in the WTO: Silence speaks volumes," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 147-166, March.
    20. Geng, Difei & Saggi, Kamal, 2015. "Is there a case for non-discrimination in the international protection of intellectual property?," Journal of International Economics, Elsevier, vol. 97(1), pages 14-28.
    21. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.
    22. Robert W. Staiger & Alan O. Sykes, 2009. "International Trade and Domestic Regulation," NBER Working Papers 15541, National Bureau of Economic Research, Inc.
    23. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.
    24. Li, Na & Ker, Alan P., 2011. "Trade Agreements, Political Economy and Endogenously Incomplete Contracts," Working Papers 116850, Canadian Agricultural Trade Policy Research Network.

    More about this item

    Keywords

    National Treatment; GATT; WTO; Trade Agreements;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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