Duties and WTO Law

From the start, the General Agreement on Tariffs and Trade was committed to the idea that the prices charged in the international product markets must not be distorted. In particular, double taxation treaties concentrate on direct taxes whereas the GATT deals mainly with indirect taxes and customs duties. This corresponds to the fact that the non-discrimination provisions in double taxation treaties focus on economic actors and the nationality or residence of individuals and companies or on the location of permanent establishments and other sources of income, whereas the most-favoured-nation (MFN) clauses, non-discrimination clauses and subsidy prohibitions in the GATT and the GATS use products and services as their point of departure.
MFN treatment may be defined as "treatment accorded by the granting state to the beneficiary State, or to persons or things in a determined relationship with that State, not less favourable than treatment extended by the granting State to a third State or to persons or things in the same relationship with that third State."

It is important to note that the most-favoured-nation principle (Art. I GATT, Art. II GATS) applies to customs duties, but also applies to indirect and direct taxes to the extent that national tax regimes distinguish between products based on the country of origin. This effects direct taxation by means of the guarantee to undistorted exports and imports between various markets by the WTO.

Art I GATT deals with the topic of most-favoured-nation treatment. Each country is obliged to accord immediately and unconditionally "any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country [...] to the like product originating in or destined for the territories of all other contracting parties". This applies "with respect to customs duties aimposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III". This reference to Art III:2 GATT make it clear that the term "charges of any kind" also comprises taxes since Art III:2 GATT states prohibits direct and indirect discrimination in respect "to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products".
Art II GATS states that "each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country".

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