ADEGBENRO ELEWADE
MIB 34
LEGAL ENVIRONMENT OF INTERNATIONAL BUSINESS.

QUESTION 1
The following rules and principles will be used to analyse if this new trade policy is permissible.
WORLD TRADE ORGANISATION RULES AND PRINCIPLES - * Trade discrimination is forbidden- There is a trade discrimination in this policy by subjecting Mediterraneo and Equatoriana to a tariff and excluding Oceania from the tariff policy and also this trade discrimination occurred because Oceania and Pacifica are members of a customs union modeled on and using the same rules at the European Union * Each state has to afford most-favored-nation status to all other WTO member states equally- Pacifica only offered most-favored-nation-status to only Oceania, instead of offering this status also to the other WTO members.
National Treatment Rule * A WTO member state must treat imports equally with its own domestic products once the imports are inside its borders- Pacifica subjected foreign cars to foreign sales tax at the point of sales but excluded cars manufactured in Pacifica from this policy, this should not be done because the national treatment principle states that foreign goods should be treated as domestic goods, so Pacifica should not subject this foreign goods to foreign sales tax since also the domestic goods are not subjected to this tax. * Products must be treated equally vis-à-vis their content; they may not be discriminated against because of the way in which they were made- Pacifica decides to set new tariff rates on cars imported into its territory, this should not be done because the National Treatment Rule states that all goods should be treated equally.
In conclusion, from the above analysis we can see this trade policy is not permissible because it is against some World Trade Organisation rules and National Treatment rules, this policy can only be