most favoured nation
Most-favoured-nation (MFN) treatment means that any advantage, favour or privilege a country grants to the products of one country must be extended immediately and unconditionally to like products of all other WTO members. It prevents discrimination between trading partners.
It is set out in Article I of GATT 1994 for goods and Article II of GATS for services. Permitted exceptions include free trade areas and customs unions (GATT Art. XXIV) and preferences for developing countries. MFN prohibits discrimination between foreign countries, while national treatment prohibits discrimination between foreign and domestic goods.
Example
If India lowers its tariff on Thai rubber, most-favoured-nation treatment requires the same tariff for rubber from every other WTO member.
In Indian law
- Article I, General Agreement on Tariffs and Trade, 1994
- Article II, General Agreement on Trade in Services