One of the main tenets of GATT regulations is the requirement for its members to comply with the most-favored-nation clause, which obligates all member countries to give the same tariff conces¬sions to all GATT countries that they give to any one member country. For example, if Germany reduces the import duty on Japanese television sets from 40 percent to 10 percent, then it must level the same rate of duty on television sets from other countries.
There are, however, important exceptions to the most-favored-nation clause, which recognize the need for preferential treatment to be given to the less-developed countries (LDCs), which without special treatment are not able to compete on a one- to one basis with, the industrialized countries. The developing countries thus have preferential access to the markets of developed countries for some of their products under the generalized system of references.