Modification of the Conditions of Competition for Goods and Services: The Side-track that Never Was
Bregt Natens & Dylan Geraets
ABSTRACT: The less favourable treatment (LFT) condition is a cornerstone of international trade law and is found in national treatment obligations that apply to both trade in goods (Articles III:4 GATT 1994 and 2.1 TBT Agreement) and trade in services (Article XVII GATS). In the case law, the LFT obligation focuses on whether the measure at issue results in a modification of the conditions of competition (MoCC) of the imported product or service (supplier) vis-à-vis the domestic product or service (supplier). Considering the difference in wording between the various national treatment provisions, and by adopting a comparative historical perspective to understand the centrality of MoCC in the LFT analysis, this paper analyses the GATT, TBT and GATS case law on MoCC, culminating for now in the Appellate Body report in EC – Seal Products. It concludes that the MoCC element of the LFT analysis should be – and always has been – approached exclusively as an effects test, which is common to GATT, TBT and GATS case law. Despite the ambiguity caused by some statements in earlier case law, other considerations do not play a role in the evaluation of the MoCC element.