Enabling clause
Encyclopedia
In 1979, as part of the Tokyo Round of the General Agreement on Tariffs and Trade
(GATT), the enabling clause was adopted in order to permit trading preferences targeted at developing and least developed countries which would otherwise violate Article I of the GATT. Paragraph 2(a) provides a legal basis for extending the Generalized System of Preferences
(GSP) beyond the original 10 years. In practice it gave a permanent validity to the GSP. The enabling clause permits developed countries to discriminate between different categories of trading partners (in particular, between developed, developing and least developed countries
) which would otherwise violate Article I of the GATT which stipulates that no GATT contracting party must be treated worse than any other (this is known as most favoured nation
treatment). In effect, this allows developed countries to give preferential treatment to poorer countries, particularly to least developed countries. Paragraph 2(c) permits developing countries to enter into preferential trade agreements which do not meet the strict criteria laid out in GATT Article XXIV for regional free-trade agreements. It allows developing countries to enter into agreements which may be non-reciprocal, or cover a very limited range of products (which would otherwise contravene the GATT).
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT), the enabling clause was adopted in order to permit trading preferences targeted at developing and least developed countries which would otherwise violate Article I of the GATT. Paragraph 2(a) provides a legal basis for extending the Generalized System of Preferences
Generalized System of Preferences
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization ,...
(GSP) beyond the original 10 years. In practice it gave a permanent validity to the GSP. The enabling clause permits developed countries to discriminate between different categories of trading partners (in particular, between developed, developing and least developed countries
Least Developed Countries
Least developed country is the name given to a country which, according to the United Nations, exhibits the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world...
) which would otherwise violate Article I of the GATT which stipulates that no GATT contracting party must be treated worse than any other (this is known as most favoured nation
Most favoured nation
In international economic relations and international politics, most favoured nation is a status or level of treatment accorded by one state to another in international trade. The term means the country which is the recipient of this treatment must, nominally, receive equal trade advantages as the...
treatment). In effect, this allows developed countries to give preferential treatment to poorer countries, particularly to least developed countries. Paragraph 2(c) permits developing countries to enter into preferential trade agreements which do not meet the strict criteria laid out in GATT Article XXIV for regional free-trade agreements. It allows developing countries to enter into agreements which may be non-reciprocal, or cover a very limited range of products (which would otherwise contravene the GATT).