MFN Status

News: India revokes Pak.’s Most Favoured Nation (MFN) status

About

  • Article 1 of General Agreement on Tariffs and Trade (GATT), 1994, requires every WTO member country to accord MFN status (or preferential trade terms with respect to tariffs and trade barriers) to all other member countries.
  • Accordingly, India accorded MFN status to all WTO member countries, including Pakistan, from the date of entry into force of the so called Marrakesh Agreement, establishing the WTO.
  • According to the MFN principle of the WTO’s General Agreement on Tariffs and Trade (GATT) — to which India is a signatory/contracting party — each of the WTO member countries should “treat all the other members equally as ‘most-favoured’ trading partners.”
  • According to WTO – “Grant someone a special favour (such as a lower customs duty rate) and you have to do the same for all other WTO members.” Hence, though MFN sounds like special treatment, in effect it means non-discrimination.
  • The MFN status was accorded to Pakistan in 1996 as per India’s commitments as a WTO member. But Pakistan has not reciprocated, reportedly citing “non-tariff barriers” erected by India as well as huge trade imbalance.

THINK!

  • SAFTA
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