Exceptions in Favour of Frontier Traffic, Customs Unions, Free Trade Areas and Discrimination

Abstract

The exceptions in favour of customs unions and free trade areas thrust into sharp focus the problem of establishing a balance between the discriminations which they inevitably involve and the general principle of equality of treatment and non-discrimination. In view of the accelerating tempo of the trend towards regional economic integrations, there is a fear that discriminations of various sorts may be multiplied and the scope of the most-favoured-nation clause considerably narrowed down. It need not be so. It all depends on the form of a projected regional arrangement and the methods adopted for achieving it. As has been pointed out in the earlier chapters, all discriminations are not necessarily bad or evil; in economic terms, exceptions to the pure concept of non-discrimination do not always endanger the fabric of world co-operation if they are confined to recognised and well-defined limits. Regional groupings should not create the danger of a stampede in the direction of discriminatory agreements, bilateral trade balancing, encouragement of inefficient production and lower standards of living, if they are “outward” and not “inward” looking.