Most Favored Nations (MFN)
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The most favoured nation (MFN) clause is a status granted by one country to another to ensure non-discriminatory trade. Countries with MFN status receive reduced tariffs and cannot be discriminated against in trade. The MFN status prevents preferential treatment to certain countries and guarantees equal trade terms. It is an important principle governed by the World Trade Organization that covers trade in goods, services, and intellectual property rights. While MFN aims to promote fair trade, exceptions are made to support developing countries through systems like the Generalized System of Preferences.
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Most Favored Nations (MFN)
- 3. 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.
- 4. • 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 3rdparty country, this concession must be given to all other countries
- 6. • 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.
- 8. • 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
- 9. Benefits
- 10. 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
- 11. 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).
- 12. 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.
- 13. INDIAN MFS • MFN status • Bangladesh, • Vietnam and • Pakistan.
- 14. CHINA MFS • There is no list of country that can enjoy MFN rate from China
- 15. • 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)
- 16. THANK YOU
Editor's Notes
- A tax imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services