Presenting By :Sukhdeep

Singh

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.

WHY “MOST-FAVOURED ”?

Sounds like contradiction suggesting special treatmentBut, actually means non – discrimination – treating virtually everyone equalEach member treats all other members equally as trading partnersIf a country improves the benefits given to one trading partner, it has to provide the same “best” treatment to all other WTO members.

• 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.

• MFN status is a method of preventing discriminatory

treatment

among members of an international trading organization.

• MFN status provides trade equality among partners by ensurin

g 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

• 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

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

MOST FAVOURED NATIONS

CONDITIONALMFN

STATUS

UNCONDITIONALMFN

STATUS

11

Conditional & Unconditional MFN

A

The United States ↓Conditional MFN ↓ (WWI)Unconditional MFN

↑Free rideLeast common denominator

↓ (WTO)Single undertaking idea

C

BMust grant privilege

grant privilege

MFN

Benefits

Due to MFN status, countries’ cannot protect their industries from cheaper goods produced by foreign countriesSome get wiped because they can’t competeWithout tariffs, some countries subsidize their domestic industries – allows them to export at incredibly cheaper rates (also known as DUMPING)

DISADVANTAGES

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).

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.

THANK YOU