INTRODUCTION. The WTO system is normally governed by two major principles.

These principles are the Most Favoured Nation principle and the National Treatment Principle1. The general position as espoused by these principles is equality in trade. Countries carrying out economic trade are supposed to treat the rest of the WTO members equally and there should be no favouritism on terms of trading barriers which is directed towards a specific country. All similar goods should be given equal treatment; this is the dint of the general position of the main principles of the WTO system. These principles are actually premised on the idea of free trade2. In the practical world, achieving absolute free trade and one hundred percent application of the two principles of WTO system is difficult. As a result, there are exceptions to these principles. There exist a few exceptions with conditions that shall actually allow for countries to change their tariffs. The first part of this paper (read answer to question 1a) shall delve into critically analyzing those provisions under GATT 1947 that allows the alterations to the original non-discriminatory3 principles i.e. the Most Favoured Nation and the National Treatment principle. IS IT POSSIBLE TO RAISE TARIFFS UNDER THE WTO/GATT SYSTEM? From a general approach the GATT 1947 imposes three main obligations to the WTO members in relation to tariffs. These can be summarised as follows: y y y Each member has to prepare a tariff schedule Each member country should have a tariff binding or bindings. Observe the bindings and negotiate only as per the provisions of the WTO agreements.

Article II of the GATT 1947 states that all trade concessions made by Members must be stated and
incorporated into the legal agreement bound rates. No other Member may be treated less favourably than any bound rate. Again here the emphasis is on non-discrimination. The prima facie position is that no country has the capacity to raise tariffs.

Focussing on the second and the third obligation, a country is obliged to observe the relevant tariff binding. For the purposes of imposing tariffs, the binding tariff acts as the ceiling tariff for all member states4. Despite this being the ceiling tariff, it is important to note that states are not compelled to have this as their tariff. However, the adjustment is limited as the states are only allowed to impose a tariff that is lower than the binding tariff. There is no room for increasing beyond the ceiling or binding tariff. It is important to note that while paragraph 1 of Article II is quite strict on the non-discriminatory stand paragraph 2 of the same offers leeway to member states to increase tariffs. Article II paragraph 2 of GATT 1947 states that nothing shall prevent a member state from imposing any anti-dumping or countervailing duty.

This has to be applied consistently with the provisions of Article VI.

"The developing countries were not able to ensure that the rules accommodated their realities... it was mainly the preoccupations and problems of the advanced industrial economies that shaped the agreement 5."

These are also referred to as non-discriminatory principles of the International economic relations. The legal basis of these principles is derived from Article I of the GATT 1947. 2 Free trade as advanced by Adam Smith provides that countries will trade more in an environment free from trade barriers. However, achieving this is impossible as nations are normally focussed on trade protectionism in order to safeguard their economic interests. 3 The policy of treating all of ones trading partners equally. A country is practicing non-discrimination if it charges the same tariff on imports of a product (for example, 5 percent on shoes) without regard to where the product is made. 4 In other words it is the maximum tariff that can be imposed by the member states. 5 Nelson Mandela commenting on the Uruguay round of GATT.