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‘Most Favoured Nation’ Status

  Jun 10, 2023

‘Most Favoured Nation’ Status

Q What is Most Favoured Nation status?

  • The World Trade Organization’s 164 members commit to treating other members equally so they can all benefit from each other’s lowest tariffs, highest import quotas and fewest trade barriers.
  • This principle of non-discrimination is known as most favoured nation (MFN) treatment.
  • There are some exceptions, such as when members strike bilateral trade agreements or when members offer developing countries special access to their markets.
  • For countries outside the WTO, such as Iran, North Korea, Syria or Russian ally Belarus, WTO members can impose whatever trade measures they wish without flouting global trading rules.

 

 Q What is procedure for removal of  MFN status ?

  • There is no formal procedure for suspending MFN treatment and it is not clear whether members are obliged to inform the WTO if they do so.
  • India suspended Pakistan’s MFN status in 2019 after a suicide attack by a Pakistan-sponsored group.
  • Pakistan never applied MFN status to India.

 

Q What does losing MFN status mean?

A

  • Revoking Russia’s MFN status sends a strong signal that the US and its Western allies do not consider Russia a economic partner in any way, but it does not in itself change conditions for trade.
  • It does formally allow the Western allies to increase import tariffs or impose quotas on Russian goods, or even ban them, and to restrict services out of the country.
  • They could also overlook Russian intellectual property rights.
  • Ahead of MFN status removal, the United States had already announced a ban on imports of Russian oil and gas.