Seychelles trading system and WTO accession |13 June 2011

(1) Most-Favoured Nation (MFN)

This is the principle stating that everyone is given the same treatment. Therefore if Seychelles was to give better treatment to a particular WTO member, Seychelles would have to give the same ‘best treatment’ to all other WTO members. 

This principle of non-discrimination means that if for example Trades Tax is 10% for a particular imported good, then it will have to charge 10% Trades Tax on it regardless of which country the good is coming from. The rule is similar for Services. Seychelles would provide equal treatment to all Foreign Service suppliers regardless from which WTO Member State they are provided from or by. 

For intellectual property, Seychelles would not be able to provide protection at different levels for different WTO Member States.  If copyrights are accorded 50 years of protection, then this protection by Seychelles’ law should accord the protection on all copyright material regardless of which WTO Member State it originates from.       

(2) National treatment:

In keeping with its WTO obligations, Seychelles would not be able to discriminate between locally produced and imported goods, which share the same characteristics referred to as like-products, once the imported goods enter the market. The National Treatment principle would dictate that Seychelles would not be allowed to charge a different rate of domestic tax (e.g. Excise Tax or Value Added Tax (VAT)) on the like-products. For e.g. if the VAT rate on locally manufactured soft drinks is 15%, the same rate should apply on the imported soft drinks. 

The National Treatment principle is more flexible in the area of services. It allows countries to discriminate between local and Foreign Service suppliers; however, this discrimination must be scheduled and must be known by Foreign Service suppliers.

For intellectual property protection, it again applies to the coverage. Therefore, using the example of locally registered copyrighted material, a song locally registered by a national of Seychelles cannot be accorded a longer period of protection than that by a foreign artist.

(3)Transparency and predictability in trade

One of the main driving forces behind the World Trade Organisation is predictability through transparency.

During the accession negotiations to the WTO, Seychelles would be negotiating on the maximum Trades Tax level it can impose on imported goods. This maximum level is referred to as the tariff binding level. This gives businesses the sense of confidence, knowing that the Government would not be able to impose Trades Tax beyond the agreed tariff binding level.  
In services, the predictability is reflected in the WTO members’ Services Schedule. It is a document which indicates the extent a service sector e.g. health is open or closed, to foreign investment. 

Being party to the WTO’s Agreement on Intellectual Property, commonly referred to as TRIPS, Seychelles would be compliant with relevant international conventions on intellectual property protection as the agreement requires signing several related conventions.  For many businesses this will provide them with the confidence that their inventions and discoveries will be adequately protected under Seychelles’ law.  

(4) ‘Single undertaking’

The WTO system is designed in such a way that it encourages consensus on different issues. 

According to the single undertaking principle, all issues must be agreed upon before a final agreement can be reached amongst Members of the WTO. This applies also to countries negotiating accession to the organisation. Therefore, Seychelles would have to meet the minimum standard (i.e. be compliant to all the basic agreements) before being allowed to join the Organisation.

In the same line, any Member State of the WTO regardless of its size can object to the rules being negotiated if it feels that they do not serve its national interest.  Once, a member of the WTO, Seychelles would have the opportunity exercise this power in negotiations in goods, services and intellectual property. 

(5) Elimination of quantitative restrictions

Quantitative restrictions in most cases refer to quotas.  The implementation of a quota system is regarded as non-transparent.  Seychelles does not apply any quota systems.
 
Conclusion 

Despite the WTO beginning its life on January 1, 1995, the current global trading system is more than 50 years old.  

Trade between major trading economies since 1948 was governed by the General Agreement on Tariff and Trade (GATT), which incorporated all five principles.  These principles today form the foundation of all WTO agreements. 

It is worth noting that 97% of world trade in goods and services are between the 153 WTO members which include small island states like Seychelles - for example Mauritius (member since 1995), Trinidad & Tobago (1995), Barbados (1995), St Lucia (1995), Solomon Islands (1996), Fiji (1996), etc.
  
Contributed by the Ministry of Finance’s Trade Division