Most Favored Nations (MFN)

Brief Info about Most Favored Nations (MFN)

1. MOST FAVOURED NATION A most favoured nation clause is a level of status given to one country by another and enforced by the World Trade Organization. A country grants this clause to another nation if it is interested in increasing trade with that country. Countries achieving most favoured nation status are given specific trade advantages such as reduced tariffs on imported goods. 

2. MFN status is a method of preventing discriminatory  treatment  among members of an international trading organization. MFN status provides trade equality among partners by ensuring  that an importing country will not  discriminate against another country's goods in favour of those from a third Once the importing country grants any type of  concession to 3 rd party country, this concession must be given to all other  countries

3. Special consideration is given to countries that are classified as "developing" by the World Trade Organization. GSP … Generalized System of Preferences The MFN status proclaimed in the GATT has been granted to about 180 countries. Only a handful of communist  countries have been denied MFN status.

4. MFN is so important that it is the first article of the (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS)  and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO

5. Benefits

6. Exceptions GATT members recognized in principle that the "most favoured nation" rule should be relaxed to accommodate the needs of developing countries, and the UN Conference on Trade and Development (established in 1964) has sought to extend preferential treatment to the exports of the developing countries

7. America MFN Currently, the only countries with Column Two status are Cuba and North Korea are Not Favoured By America In 1998, in America, “MFN” has been Renamed as “Permanent Normal Trade Relations” (NTR).

8. RUSSIAN MFN The major beneficiaries of Russia are Brazil, China, Turkey, Ecuador, Argentina, South Korea, Iran and India. The report on preferential trade treatment of Belarus, Kazakhstan and Russia in favour of developing and least developed countries All of the Former Soviet States, Including Russia Were Granted MFN status in 1996, but in 1996 the U.S. could not grant MFN status to some members of the Former Soviet Union, Including Russian Federation, Because of the Jackson- Vanik Amendment.

9. INDIAN MFS MFN status Bangladesh, Vietnam and Pakistan.

10. CHINA MFS There is no list of country that can enjoy MFN rate from China

11. The countries and areas initially denied MFN tariff treatment under Section 5 were: Albania, Bulgaria, China ,Czechoslovakia, Estonia, Germany Hungary, Indochina (any part of Cambodia, Laos, or Vietnam under Communist domination or control), Korea Kurile Islands, Latvia, Lithuania, Outer Mongolia, Poland, Rumania, Southern Sakhalin Island, Soviet Union, Tanna Tuva , and Tibet. Countries to which, at present, MFN tariff status is denied are Afghanistan, Cuba, Laos, North Korea and Yugoslavia (Serbia and Montenegro)

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