What Is a Most Favored Nation?

Most-favored-nation treatment (English: most-favored-nation treatment), abbreviated as MFN, is a system commonly used in international economic and trade relations. It is a legal treatment clause in trade treaties and agreements between countries. Taxation, navigation and other aspects are a system of giving preferential benefits to each other, providing necessary convenience, and enjoying certain privileges, etc., also known as "non-discriminatory treatment." It usually refers to the preferential, privileged or exempt treatment granted by both Contracting States to each other in terms of commerce, navigation, customs duties, legal status of citizens, etc., no less than the present or future grant to any third country. The provisions of the treaty that provide such treatment are called "most-favored-nation clauses".

Most favored nation treatment

Most-favored-nation treatment (English: most-favored-nation treatment), abbreviated as MFN, is a system commonly used in international economic and trade relations. It is a legal treatment clause in trade treaties and agreements between countries. Taxation, navigation and other aspects are a system of giving preferential benefits to each other, providing necessary convenience, and enjoying certain privileges, etc., also known as "non-discriminatory treatment." It usually refers to the contracting parties' commerce, navigation,

The basic goal of most-favored-nation treatment is to engage all

The most-favored-nation treatment principle contains four main points:

1. Automatic. When a Member State grants another country more benefits than other members enjoy, other members automatically enjoy such benefits.

2. Identity. When a member gives a certain kind of preferential benefit to other member countries, the benefit standard must be the same.

3 Reciprocity. Any member is both a beneficiary and a beneficiary. That is, when enjoying the right of most-favored-nation treatment, it also assumes the obligation of most-favored-nation treatment.

4 universality. Most-favored-nation treatment applies to all imported and exported products,

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Most-favored-nation treatment can be divided into

According to the Black Law Dictionary,

The term "most-favored-nation" in the principle of most-favored nation treatment first appeared in the 17th century.

However, most-favored-nation obligations can be traced back to the 11th century. then

1. GATT1994 on the application of the most-favored-nation treatment principle

In accordance with the relevant provisions of Articles 1 and 3 of the GATT text, members apply MFN treatment within the following scope:

(1) Collected on the international payment transfer of export or import, and related export or import and export of goods

There are exceptions to the principle of most-favored-nation treatment that may not be enforced:

First, a developed country gives more preferential differential treatment to industrial products and semi-finished products exported by developing countries;

China Accession Working Group

The basic meaning of the most-favored-nation treatment principle is to guarantee the fair competition of the same products and services of all other members in the domestic market of any member country through mutual commitments to the most-favored-nation treatment principle. And services provide constraints in the most extensive competition in a wider market, and any unilateral concession to any member will become a universal obligation to all members. Therefore, when making any commitments such as tariff concessions or market opening, it must be considered from the overall perspective of all WTO members, and not only meet the special requirements of a certain member, otherwise it is the most-favored-nation treatment. Direct violations will inevitably cause international trade disputes and even suffer sanctions from the WTO dispute settlement mechanism. At present, the basic form of China's most-favored-nation treatment is bilateral unconditional reciprocity. It is provided through the most-favored-nation clauses in bilateral agreements, which are mainly applicable to economic fields such as foreign investment and trade in China and shipping. In terms of investment, in more than 70 bilateral investment protection agreements signed by China and foreign countries, the contracting parties have given each other's investors the most-favored-nation treatment in investment-related activities and compensation for losses caused by war and revolution. Most-favored-nation treatment. In terms of trade and shipping, China has signed over 100 trade, navigation treaties, trade agreements, and trade and payment agreements or protocols with Italy, Australia, Canada, Japan, the United States, Thailand, Malaysia, Brazil and other countries. These treaties, agreements or The protocols contain MFN clauses.

After China's entry into the WTO, under the guarantee of GATT's unconditional most-favored-nation treatment, China's foreign trade in goods will expand in a wider and fairer space. And if GATTS's most-favored-nation treatment is implemented strictly in an unconditional manner, it will also create opportunities for certain advantageous service industries in China, such as labor export, tourism, and entertainment, to enter the wider world service industry investment market without discrimination. . Of course, we should see that GATTS establishes conditional most-favored-nation treatment. The basic reason is to avoid the "unfair free-riding" phenomenon. That is, if unconditional most-favored-nation treatment is implemented, many developing countries can open their services without reciprocity. Markets and peers provide higher service industry trade and investment treatment, and automatically enjoy higher levels of market opening and service trade and investment treatment in developed countries. In the actual operation of GATTS, the most-favored-nation treatment is combined with the specific commitments of each country on market access and national treatment, so that the market access and national treatment specifically promised by each country constitute the specific content of most-favored-nation treatment. Therefore, it is also an opportunity for the relatively backward service industry investors in China, so that the backward service industry has more time to adjust to meet the needs of global competition.