4_National Treatment

→ MFN = equal treatment between countries

→ National Treatment = equal treatment within the market

Imported goods must be treated no less favorably than domestic goods once they have entered the market

1️⃣ Internal Taxation (Article III:2)

• “Like products”: → No difference in internal taxes is allowed

• “Directly competitive or substitutable products”: → Tax differences are only permitted if they do not have a protectionist purpose

2️⃣ Internal Regulation (Article III:4)

• Applies to laws, regulations, and requirements that affect the internal sale, offering for sale, purchase, transportation, distribution, or use of goods.

• These measures must not disadvantage imported products compared to domestic ones

1. Tariffs (mainly for goods; allowed)

2. Non-tariff barriers (e.g. quotas, technical barriers, customs procedures, preshipment inspection, origin markings)

It mandates binding of tariffs in "Schedules of Concessions", creating certainty by setting maximum customs duties for products.

1. Classification (based on the Harmonized System)

2. Valuation (based on transaction value)

3. Origin of the goods

1. Mode 1 – Cross-border supply 💻 Example: A customer in France streams Netflix, a U.S.-based service. ➝ The service crosses borders without the supplier or consumer moving.

2. Mode 2 – Consumption abroad 🏥 Example: A German tourist travels to Thailand for a medical procedure. ➝ The consumer moves abroad to receive the service.

3. Mode 3 – Commercial presence 🏦 Example: A Canadian bank opens a branch in Brazil. ➝ The supplier sets up a business in another country to provide services locally.

4. Mode 4 – Presence of natural persons 👨‍💼 Example: An Indian IT specialist temporarily works in Germany under a contract. ➝ The individual moves abroad to provide the service personally.

1. Ad valorem – percentage of the product’s value

2. Specific – based on physical units (e.g. per kg, per unit)

3. Mixed – combination of ad valorem and specific tariffs

Front: What is an ad valorem tariff? Back: A tariff calculated as a percentage of the value of the imported product (e.g. 10% of the invoice value).

Front: What is a specific tariff?Back:A tariff based on a specific unit such as weight, volume, or number (e.g. $0.50 per kilogram).

Front: What is a mixed tariff?Back:A tariff that combines ad valorem and specific elements, for example: 10% of the value + $1 per unit.