MOST FAVOURED NATION STATUS

Most Favoured Nation (MFN) treatment, a fundamental principle under WTO rules, promotes non-discriminatory trade. It ensures that a country, granting MFN status to one trade partner, must extend the same treatment to all WTO members, preventing preferential treatment.

MFN doesn’t imply preferential advantages; it upholds equitable trade. When a nation obtains MFN status, it commits to reducing trade barriers, lowering tariffs, and facilitating the free flow of goods.

The removal of MFN status lacks a formal process and notification requirement. For instance, India suspended Pakistan’s MFN status in 2019 due to security concerns.

Benefits of MFN include expanded market access, reduced export costs, enhanced competitiveness, streamlined trade, increased demand, and mitigation of trade protectionism’s negative economic effects, particularly beneficial for developing nations.

However, MFN can lead to price wars and domestic industry vulnerability, as all trade partners must be treated equally, potentially harming local businesses due to cheaper imports.