ABSTRACT
The most-favored-nation principle is the central rule of the General Agreement on Tariffs and Trade (GATT). The establishment of the GATT was an immediate post-war reaction to the deterioration of the world trading system during the inter-war period and during World War II. It was felt that the great depression and perhaps even the war itself resulted, at least partly, from destructive national egoism in trade policy. Among most economists and policy-makers it is well understood that free trade will in general increase economic growth and welfare by fostering greater efficiency in allocating resources, lowering prices and increasing the variety of options for consumers and producers. It is an unsettled issue what the main impediments to international trade in services are and how a substantial liberalization could be achieved. The new issues that arise from the integration of trade in services into the Uruguay Round may be illustrated by the conceptual differences between goods and services.
