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Most Favoured Nation Status : Key Points

Most Favoured Nation Status: Key Points

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 for goods and services.

  • 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.
  • 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-based Islamist group killed 40 police. Pakistan never applied MFN status to India.
  • Revoking Russia’s MFN status sends a strong signal that the United States 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.

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