Volume 03 Issue 07-2023
94
International Journal Of Law And Criminology
(ISSN
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2771-2214)
VOLUME
03
ISSUE
07
Pages:
94-102
SJIF
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(2021:
5.
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OCLC
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1121105677
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Servi
ABSTRACT
The World Trade Organization is an intergovernmental organization that regulates international trade. The principle
of non-discrimination, which is considered the basic principle of this organization, includes the most favored nation
treatment and national treatment. Through this article, the author describes the history of the national regime within
the WTO, its use in the practice of states (especially in developing countries) and exceptions to this principle, as well
as the associated regime in the legislation of the Republic of Uzbekistan, a country increasingly approaching WTO
membership. Having studied the problems, the author makes his proposals for their legal regulation.
KEYWORDS
The WTO, its use in the practice of states (especially in developing countries) and exceptions to this principle, as well
as the associated regime in the legislation of the Republic of Uzbekistan.
INTRODUCTION
WTO agreements are legal documents that cover a
wide range of spheres, from agriculture to trade in
services, textiles, telecommunications, government
procurement, industrial standards and product safety,
food hygiene regulations, intellectual property, and so
on. But all these agreements are based on a number of
principles. These principles are also the basis of the
multilateral trade system.
Along with transparency, reciprocity and efficiency,
the principle of non-discrimination is one of the main
principles of the WTO, which is divided into the most
favorable nation regime and the national regime. This
article is devoted to the history of the national regime,
its content within the framework of the WTO, its
application in the practice of states, and the problems
related to this regime in the legislation of the Republic
Research Article
THE PRINCIPLE OF “NATIONAL TREATMENT” IN WTO AND THE
PROBLEMS OF ITS IMPLEMENTATION IN THE LEGISLATION OF
UZBEKISTAN
Submission Date:
July 20, 2023,
Accepted Date:
July 25, 2023,
Published Date:
July 30, 2023
Crossref doi:
https://doi.org/10.37547/ijlc/Volume03Issue07-16
Almosova Shahnoza Sobirovna
Tashkent State University Of Law Lecturer At The Department Of International Law And Human Rights,
Uzbekistan
Journal
Website:
https://theusajournals.
com/index.php/ijlc
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
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of Uzbekistan, which is getting closer to WTO
membership.
Since WTO law is built on the basis of public
international law, the national regime is also applied
within the framework of the WTO in a way that is not
far from its content in international law. The national
regime is a concept of international law, the principle
of treating citizens of another country in the same way
as its own citizens, if a country grants certain rights and
privileges to its citizens, it means that foreigners in the
country should be given equal rights and privileges at
the same time.
Traditionally, the municipal laws of host countries
established a national regime for foreigners to limit any
differential treatment in favor of foreigners and mainly
to protect the property of foreign legal entities from
expropriation. On the other hand, the guarantees of
the national regime, which provide for the benefits for
foreigners, are usually developed through contractual
obligations accepted on the basis of mutual
agreement.
In international law, the national regime standard is
used in two different contexts. In one respect, the
standard represents one of the doctrines of
international law that apply to the person and property
of foreign nationals known as the Calvo doctrine.
According to this doctrine, which is especially
supported by Latin American countries, foreigners and
their property are entitled to a treatment no less than
that provided to citizens of the host country in
accordance with its national legislation. In contrast to
this doctrine, under the doctrine of state responsibility
for the damage caused to foreigners and their
property, historically supported by developed
countries, international customary law suggests that it
defines the minimum international standard of the
regime in relation to foreigners, and allows them to
provide a more favorable regime than their own
citizens.
If we look at the history of the origin of this regime, the
national regime in contract practice originates from
trade agreements. The first treaties to apply the
concept of non-discrimination between foreign and
domestic merchants date back to the practices of the
Hanseatic League in the 12th and 13th centuries. The
United States' Treaty of Amity, Commerce, and
Navigation contained a clause offering national
treatment. Similarly, national treatment has long been
the standard in patent and copyright conventions.
Article 2 of the Paris Convention for the Protection of
Industrial Property (1883) states that nationals of
member countries "shall enjoy the same protection" as
nationals of the host member state for which
intellectual property protection is requested.
During the 20th century, it became common to
negotiate separate international trade and investment
agreements, resulting in a variety of legal standards,
dispute resolution procedures, and administrative
institutions. But initially, the situation with the national
regime is more reflected in bilateral investment
treaties (BITs) as the relationship between
international trade and international investment law.
The history of the national regime in international
trade began with its first formalization in Article 18 of
the Havana Charter, which was created to found the
failed International Trade Organization (ITO), and this
principle was reworked in the GATT in 1947.
With the establishment of the World Trade
Organization's Dispute Settlement Body and Appellate
Body ("AB"), which began its operation in 1995,
centralization of issues related to the national regime
in public international law was achieved. In contrast,
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decentralization remains a key feature of international
investment law, which is built on a foundation of more
than 3,000 different ad hoc tribunals organized across
a network of mostly bilateral treaties. Furthermore,
while the WTO is primarily responsible for settling
international
trade
disputes
between
states,
international investment law is used by private litigants
and various commercial arbitration institutions,
including Investment Disputes governed by the
International Center for Ar
bitration (“ICSID”), the
Permanent Court of Arbitration (“PCA”) and the
International Chamber of Commerce (“ICC”).
The national regime for applying internal measures to
imported products in trade matters is one of the main
principles of the multilateral trade system created by
the General Agreement on Tariffs and Trade in Goods
(GATT). Based on the fact that the main focus of the
GATT is on the control and liberalization of customs
measures restricting international trade in goods, the
basic principle in this regard is that usually any customs
measures designed to give domestic products a
competitive advantage should be in the form of
customs tariffs set at the border, and the level of such
customs tariffs is decided during negotiations and is
mandatory be reflected in the "schedule of
obligations" (GATT Art. 2 Schedule of Concessions).
Within this schedule, Article III of the GATT ("National
treatment for Internal Taxation and Regulation") plays
a decisive role, as its paragraph 1 makes clear, it seeks
to ensure that no "domestic" measures are taken
against imported products to protect domestic
production. This directly serves the purpose of
ensuring that domestic measures are not used to
nullify or weaken the effects of tariff preferences and
other multilateral rules applicable to customs
measures. Therefore, the role of the national
treatment principle of GATT Article III should be
understood in light of the distinction between customs
measures and internal measures.
JST huquqida milliy rejim subyekti faqat xorijiy davlatlar
yuridik shaxslari hisoblanadigan eng ko’p qulaylik
beruvchi rejimdan farqli ravishda, chet elliklar va
mahalliy aholiga teng munosabatda bo'lish
–
import
qilingan va mahalliy ishlab chiqarilgan tovarlarga teng
munosabatda bo'lishi kerakligini anglatadi. Xuddi shu
tartib xorijiy va mahalliy xizmatlarga, xorijiy va mahalliy
tovar belgilariga, mualliflik huquqi va patentlarga
nisbatan qo'llanilishi kerak. Ushbu “milliy rejim”
tamoyili (boshqalarga ham o‘z fuqarolari va/yoki
rezidentlari bilan bir xil munosabatda bo'lish) JSTning
uchta asosiy kelishuvida ham o’z aksini topgan (GATT 3
-
moddasi, GATSning 17-moddasi va TRIPSning 3-
moddasi), garchi bu tamoyil ularning har birida
boshqacha tarzda talqin qilinadi.
In WTO law, the subject of the national regime is ,
unlike the most favorable nation regime, in which only
legal entities of foreign countries are considered, equal
treatment of foreigners and locals. It means that
imported and domestically produced goods should be
treated equally. The same procedure should be applied
to foreign and domestic services, foreign and domestic
trademarks, copyrights and patents. This principle of
"national treatment" (treating others in the same way
as one's own nationals and/or residents) is reflected in
all three major WTO agreements (GATT Article 3, GATS
Article 17 and TRIPS Article 3), although this principle is
interpreted differently in each of them.
In the context of WTO law, substantive national
treatment means that member states must not apply a
discriminatory treatment between imports and
domestic "like products" (except for the establishment
of customs tariffs). This principle prevents countries
from applying discriminatory measures against imports
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and compensating for the impact of tariffs through
nontariff measures. For example, country A lowers its
import tariff on product X from ten percent to five
percent, but imposes a five percent internal
consumption tax on that imported product X, and this
internal tax effectively compensates for the reduction
of the tariff by five percentage points. For this reason,
the national regime also aims to eliminate "hidden"
internal barriers to trade by requiring WTO members to
create a treatment for imported products no less
favorable than that applied to products of national
production. Regarding "hidden" internal barriers,
Article 3(1) of the GATT stipulates that members should
not impose internal taxes or other internal charges,
procedures, regulations, and requirements affecting
imported or domestic products in a way that protects
domestic production. With respect to internal taxes or
other internal charges, Article 3(2) obliges WTO
members not to apply standards higher between
imported goods and "like" domestic goods or between
imported goods and "directly competitive or
substitutable goods" than those applied to domestic
products. Regarding domestic rules and regulations,
Article 3, paragraph 4, provides that members must
create for imported goods a regime no less favorable
than that applied to "like products" of national origin.
By all accounts, the national treatment principle was
designed to prohibit "disguised protectionism" and to
prohibit measures equivalent to tariff barriers,
reducing tariff and other trade barriers, the principle is
aimed at conscientiously fulfilling the obligations of
WTO member states to reduce tariff and other trade
barriers and ensure equal conditions of competition.
But it is very difficult to detect hidden protectionism or
measures that circumvent the rules of trade without
barriers.
In the report of the WTO Appellate Body on the case
"Japan - Taxes on Alcohol Beverages" (Appellate Body
Report, Japan - Taxes on Alcoholic Beverages,
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, page 16 (1
November 1996)), the Panel stated that "the purpose
of Article III is to ensure that domestic measures are
not applied to imported or domestic products to
protect domestic production", while in its final report,
the Appellate Body in the "Philippines - Distilled Spirits"
case (Philippines-Distilled Spirits, paras. 221-222
(WT/DS396/AB/R, WT/DS403/AB/R)) defines the object
and purpose of Article III of the GATT-1994 as
"requiring equality of competitive relations and
protecting the expectation of equal competitive
relations".
GATT rules are primarily aimed at reducing barriers
between markets, rather than harmonizing the
conditions of competition in markets. Therefore, in
principle, they only impose restrictions on trade policy,
but leave the contracting parties free to conduct their
domestic policy. National treatment is applied only
after the product, service or object of intellectual
property enters the market. Therefore, levying a
customs duty on imports is not considered a violation
of the national regime, even if an equivalent tax is not
levied on domestically produced products.
The national regime raises the most important
problems of development in the field of foreign direct
investment. It provides formal equality between
foreign and national investors. However, in practice,
national investors, especially those who can be
described as "new industries" or "new entrepreneurs",
are at an economic disadvantage compared to foreign
investors who may be economically powerful
transnational corporations (TNCs). Such "economic
asymmetries" may require a certain degree of
flexibility in the treatment of national investors,
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especially in developing countries by granting
exceptions to the national regime.
For many countries, the national regime standard
serves to eliminate distortions of competition and thus
enhances the efficiency of the investments involved.
An extension of this argument points to the ongoing
internationalization of investment and production, and
concludes that access to foreign markets on non-
discriminatory terms is necessary for the efficient
functioning of an increasingly integrated world
economy. On the other hand, in a world characterized
by a sharp inequality of economic power, technical
capabilities and financial power, ensuring economic
development national firms may be necessary to
ensure a certain degree of rapid equality there is no
substitute for the encouragement of domestic
industries by host countries to ensure some
differentiation between national and non-national
industries.
The Republic of Uzbekistan is actively trying to become
a member of the WTO and, accordingly, join the main
agreements of the WTO system, so the analyses of this
principle is undoubtedly relevant now. One of the tasks
of becoming a member of the WTO is to harmonize
national legislation with the legal norms of the WTO.
Thus, the analysis of the legislation of the modern
Republic of Uzbekistan, as well as the place and role of
the principle of national regime in it, its strengthening
in bilateral, multilateral agreements and unilateral
order is on the agenda as an urgent issue.
In particular, the legislation of the Republic of
Uzbekistan
GATT
(non-discrimination
between
imported and domestically produced goods in terms of
internal taxation and other measures aimed at
protecting national production), GATS (each member
state providing services and suppliers of services of any
other Member State with respect to all measures
affecting the supply of services no less favorable than
that accorded to national "suppliers of like services and
service providers"), TRIPS (a member state provides
nationals of other member states with a favorable
regime for the protection of intellectual property no
less than that provided to its own nationals, i.e., taking
into account the intangible characteristics of
intellectual property objects, the owners of intellectual
property rights - citizens of member states - are
considered objects of the national regime) and the
issue of harmonization with the norms related to the
national regime in other WTO agreements is one of the
main issues on the agenda today.
During the analysis of the compliance of the legislation
of the Republic of Uzbekistan with the requirements of
this principle of the organization, we realized that
several norms of legal documents should be improved
in this regard. Below is an analysis of some of these
normative legal documents:
–
Different tax rates for tax residents and non-
residents of the "Tax Code" of the Republic of
Uzbekistan, to be more precise, specific features of
taxation of legal entities involved in private foreign
direct investment (Chapter 67), specific features of
taxation of legal entities participants of special
economic zones (Chapter 68), specific features of
taxation in some regions of the Republic of Uzbekistan
(Chapter 711), fulfillment of tax obligations in special
circumstances (Chapter 72) tax benefits given to
certain categories of tax residents should be reviewed
from the point of view of the principle of non-
discrimination,
including
national
treatment
compliance (However, taking into account that states
may grant exceptions in some places, the state should
consider the preferential conditions in its tax system in
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accordance with WTO agreements (GATT XX, XXI
article and GATS XIV, XIV bis))
It should be noted that the principle of national
treatment applies only to taxes, fees and charges
applied to the import and sale of products. For
example, income tax does not fall within the scope of
the principle of national treatment, because income
tax is not imposed on products. An example of an
indirect tax is the tax imposed on raw materials used in
the production of a product.
–
Customs duty payment preferences and tariff
preferences provided for in the "Customs Code" of the
Republic of Uzbekistan (Chapter 43) shall be examined
in order to prevent the establishment of discriminatory
rules for goods entering the Republic of Uzbekistan
should be carried out. Paragraphs 10-15 of the Annex to
the Law of the Republic of Uzbekistan No.600 "On
State Duty" dated January 6, 2020 on the amounts of
State duty rates regarding the provision of legal
protection to intellectual property objects State duties
for performing actions of legal importance are
different for residents and non-residents, and they
should be combined and coordinated with Article 3 of
TRIPS. (As a matter of fact, resident or non-resident
status cannot be said to completely contradict the
requirement of citizenship in the content of Article 3 of
TRIPS, because we all know that among the residents
of the Republic of Uzbekistan there are also foreign
citizens, and being a citizen of the Republic of
Uzbekistan There are also non-resident individuals for
the Republic of Uzbekistan. However, setting the fees
paid to them for performing actions related to public
services at a different value is contrary to the principle
of non-discrimination in the national regime.)
Some legal documents should be supplemented in
order to clarify the components of the national
treatment regime principle and not to leave gaps in the
legislation in this regard. In particular, the author notes
that as the violation of national treatment rules is
committed on "like product" or "like service", the Law
on "Competition" should contain precise definitions of
these concepts, and believes that entrepreneurs and
responsible authorities should fully understand the
essence of these concepts in order to create equal
competition conditions. Precisely, Article 4 of this law
refers to the "Basic Concepts", and this article should
be supplemented with the terms of “like product” and
“like service” re
placing it with the term of
"substitutable goods" in the article, it is proposed to
distinguish between the concepts of “like product”
and “substitutable goods”.
Paragraph 10 of Article 45 of the Tax Code contains the
norm that "goods (services) with the same basic
features are recognized as identical goods (services)
for the purpose of taxation", however, this is not fully
consistent with the content of the concepts of "like
product" and "like services" in the decisions of the
WTO Dispute Settlement Body and Appellate Body.
The concept of "like product" is very important in
applying the principles of equality and non-
discrimination. GATT-1994 itself does not define the
concept of "like product". The concept of "like
product" has been interpreted mainly by WTO panels
and appellate bodies. According to it, it was noted that
the content of "like product" may vary depending on
the situation and where it is used, and it is said that it
will be considered on a case-by-case basis.
The practice of the WTO shows that the "likeness" of
products should be determined based on "the nature
of the products and the level of competition in the
market". In the Korea-Alcoholic Beverages case (Korea
—
Alcoholic Beverages, para. 118 (WT/DS75/AB/R,
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WT/DS84/AB/R)), the WTO panel stated in its report:
"like" products are a subset of directly competitive or
substitute products: all like products are, by definition,
directly competing or substitutable products, but not
all "directly competitive or substitutable" products are
said to be "like". In the same case panel report, in the
ordinary sense of the term, products can be
competitive or substitutable if they can substitute for
each other or offer "alternative ways of satisfying a
particular need or taste".
In its report on the Japan - Taxes on Alcoholic
Beverages case (WTO Dispute Appellate Body Report
on Japan
–
Alcoholic Beverages, I.T.L.R. vol 1, iss. 2 at
242 (July 11, 1996)), the Panel notes that the following
factors should be considered when determining
whether products are "like":
•
Physical characteristics of products;
•
Habits and tastes of consumers;
•
End use of the product;
•
Product tariff classification;
In addition, Robert E. Hudee includes "product
substitutability among these factors, according to him,
this ability is measured by the degree to which
consumers perceive two products as functionally
equivalent, the willingness of the consumer to
substitute one product for another.
And Van den Bossche emphasizes that the methods
and processes of production are among the factors in
determining the "likeness" of products. However, the
importance of this factor is rejected in determining
whether the products are "like" in GATT Tuna-Dolphin
Case (I and II).
Continuing the analysis of the legislation of
Uzbekistan, Article 4 of the Law "On Competition"
defines the concept of substitute goods, in which it is
said "goods that are comparable in terms of their
intended function, use, quality and technical
characteristics, price and other parameters, such that
the recipient actually substitutes or is ready to
substitute one commodity for another during
consumption will be", which largely corresponds to the
content of the concept of "like product" (not taking
into account the absence of a rule related to tariff
qualification). It is appropriate to unify these two
concepts based on the content of the "Korea-Alcoholic
Beverages" case and the goals of the "Competition"
Law, and first of all, the goals of Uzbekistan's entry into
the WTO.
Xulosa o’rnida shuni aytish mumkinki, milliy rejim
prinsipi xalqaro iqtisodiy huquqning maxsus tamoyillari
(iqtisodiy kamsitmaslik, o'zaro manfaatdorlik, eng ko’p
qulaylik beruvchi rejim, milliy rejim, imtiyozli rejim)
orasida eng muhim o'rinni egallaydi, hamda xalqaro
huquqning umumiy prinsiplari va xalqaro huquqning
boshqa sohalari prinsiplari bilan bir qatorda xalqaro
huquq tizimiga kiritilgan. Milliy rejim prinsipi xalqaro
iqtisodiy huquqning maxsus printsipi sifatida an'anaviy
xususiyatga ega bo'lgan prinsip sifatida belgilanadi,
unga ko'ra davlat, qoida tariqasida, o'z hududida
(odatda ma'muriy-hududiy birliklarida) tashqi va ichki
savdo, soliqqa tortish, milliy qonunchilikni qo'llash, sud
himoyasi, moliyaviy, ma'muriy, transport va boshqa
sohalarda xorijiy shaxslarga milliy shaxslarga nisbatan
qo'llaniladigan rejimni taqdim etadi. Shu sababli, milliy
rejim prinsipiga rioya qilish huquq va majburiyatlar
muvozanatini saqlash uchun muhim bo'lib, ko'p
tomonlama savdo tizimini saqlab qolish uchun
muhimdir.
CONCLUSION
In conclusion, it can be said that the principle of
national treatment occupies the most important place
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among the special principles of international economic
law (economic non-discrimination, mutual benefit,
most-favored nation regime, national treatment
regime, preferential regime), and international law
along with the general principles and principles of
other areas of international law, it is included in the
international law system. The principle of national
treatment is defined as a special principle of
international economic law, which has a traditional
nature, according to which the state, as a rule, in its
territory (usually in its administrative-territorial units)
external and internal trade, taxation, provides a regime
applicable to foreign persons in relation to national
persons in the application of national legislation,
judicial protection, financial, administrative, transport
and other areas. Therefore, compliance with the
principle of national treatment is important for
maintaining the balance of rights and obligations, and
for maintaining the multilateral trading system.
Analysis of the legal consequences of Uzbekistan's
membership in the WTO, the application of the
national treatment regime of the WTO for Uzbekistan
leads to increased competition for goods and services,
attracting additional investments to the territory of the
Republic of Uzbekistan and allows us to conclude that
the application of the national treatment regime in the
markets of WTO member countries prevents
discrimination against the import of goods and services
of Uzbekistan in most cases.
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