most favoured nations
TRANSCRIPT
Prestige Institute of Management & Research
Presented By – Guided By –
Isha Joshi Prof. Nidhi Sharma
MOST FAVOURED NATIONS
INTRODUCTION“Most Favoured Nation” is a status or level of treatment accorded by one state to another international trade.Recipient country must receive equal trade advantages as the MFN by the country granting such treatment (trade advantages include low tariffs or high import quotas)
Together with the principal of “National Treatment”, MFN is one of the cornerstones of WTO trade law.
Today’s concept of MFN starts to appear in the 18th century, which is when the division of Conditional and Unconditional most favoured nation status also began
MOST FAVOURED NATIONS
CONDITIONALMFN
STATUS
UNCONDITIONALMFN
STATUS
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.
ADVANTAGESCRITICALLY IMPORTANT FOR SMALLER &
DEVELOPING COUNTRIES –Larger market accessLower export cost due to low tariff barriersHelps in making the product competitiveReceive the benefits of economies of scaleIncreases the country’s economic growth
It cuts down on red tape. Different tariffs and customs don’t have to be calculate for each import since they all are the same.
Reduces the ill effects of trade protectionism.
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
EXCEPTIONSRule should be relaxed to accommodate the needs of developing countriesUNCTAD (1964) has sought to extend “preferential treatment” to the exports of developing countriesTrade agreements usually allow for exceptions to allow for “regional economic integrations”
