The importance of Multilateral trade system in International business
The multilateral trade system is the trade happening between two or more nations. There is membership of several nations from developing, developed, emerging nations. Multilateral trade is basically for the benefit of trade to all nations. The multilateral trade happens in the organization like WTO, BIMSTEC, SAFTA, NAFTA, EU, etc. The trading system has several principles of Most favored nation treatment, national treatment, special and differential treatment. These principles are made in order to function in a similar manner and provide the benefit of multilateral trade to all.
Most favored nation treatment is one of the principles which comes with the concept of equal treatment to all nations. There are big nations as well as small nations but multilateral trade allows both big and small nations with equal treatment making clear there is no difference in trade between nations.
Nation treatment is another principle of multilateral trade where there is a non-discrimination policy to all goods produced anywhere. According to this treatment, foreign goods are also treated as the nation's goods and are promoted equally. It is removing the barrier or restriction to use foreign products.
Special and differential treatment is another principle in order to promote the countries in the trade who are weak. The main aim is to reduce the marginalization where there is a huge gap in the income level. Special care is provided to some weak nations to make them more capable of trade.
The multilateral trade system is following certain principles to reduce discrimination as well as promote the trading system of the required people.