mfn

MFN stands for Most-Favored Nation, a principle in international trade under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). Under MFN, a member state's tariff reductions, quotas, and other favorable terms granted to one trading partner must be extended immediately and unconditionally to all other WTO members, treating all like products equally. The idea is to prevent tariff discrimination and to promote predictable, non-discriminatory trade relations among members.

Legal basis: Article I of GATT/WTO enshrines MFN; MFN treatment applies to essentially all products and many measures that affect trade. Exceptions exist: regional trade agreements are allowed under Article XXIV if they cover substantially all trade, and developed countries may grant non-reciprocal preferences to developing countries under the Enabling Clause via the Generalized System of Preferences.

Practically, MFN serves as the default tariff treatment in most members' schedules and forms the baseline against which preferential agreements and unilateral preferences are measured. Some jurisdictions use the term Normal Trade Relations (NTR) to describe MFN status in domestic law, but the legal effect is equivalent under WTO rules.

Criticism notes include concerns that MFN can reduce policy space for infant industry protection or targeted development measures, and that it can entrench lower duties on all partners rather than addressing specific development needs. Proponents argue MFN fosters predictable, multilateral trade and reduces distortions.

History: The MFN principle originated in the GATT era (1947) and was carried into the WTO framework established in 1995. It remains a central, if sometimes contested, feature of international trading rules.