Question 1

The principle behind the MFN rule stated that if a member of WTO A negotiates with country B, which may or may not be a WTO member to reduce tariff on a product to X percentage, this same rate must also be extended to all other WTO members.

• Article I.1 of the General Agreement on Tariffs and Trade (GATT) embodied the principle of Most Favoured Nation (MFN) for the world to trade. Outline MFN’s political and economic rationales in the GATT context. You should expand your answers using illustrations and examples wherever appropriate. 
• The risk of free-riding is a challenge associated with the principle of MFN. Explain the mechanism of MFN resulting in free-riding and how this can be circumvented. You should provide an example and support your answer with reference to GATT Article as appropriate.

Question 2

Assuming you are now working as a Senior Manager for International Business in a Singapore owned and operated engineering firm (Company A) that specialises in the supply of “design” and “assembled” in Singapore air-conditioning system (HS code 84158300) for large residential and commercial development. Your immediate task is to research and propose 3 key export markets where the cost of goods is the key to competing for business to thrive applying FTA.

• Show a listing of Singapore’s Preferential Trade Agreements within the context of ASEAN FTA.
• Assuming the cost of goods is $100 per unit, and the key export market identified are Indonesia, Vietnam, and the Philippines, calculate the tariff savings for Company A in value and percentage per unit by applying ACFTA. You should quote the source of the rate applied and present the result in a table format accordingly. 
• Due to Company A importation of components from lower-cost producers and value add in design and assembly, export process method in relation to the Rules of Origin (ROO) applies. Explain how the ROO process works and illustrate how ROO improves the living standard for society in lower cost-producing countries.