Trade can be used as a foreign policy tool – including as leverage on human rights issues. But there are two foundational principles of international trade law which dictate how this can and cannot be done.
The first, ‘national treatment’, requires that once a good or service has entered a country’s market, it should be treated equally to those produced locally. This means, for example, that once an item of clothing manufactured in Sri Lanka enters the Belgian market, the government generally cannot impose additional restrictions on the product which differ from those applied to clothing manufactured in Belgium; and there are restrictions on giving domestic companies advantages through, for example, subsidies (‘state aid’).
The second, known as ‘Most-Favoured-Nation (MFN)’, restricts countries from granting special access to only select other countries. It does this by requiring that if a country wants to grant special trade preferences to another country, it must do so for all. This means that the UK, for example, cannot unilaterally offer special exceptions to imports from India or the US without also offering them universally.
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