IASNOVA
Recently UPSC has been asking terms related to economic international bodies ,and MFN being in news recently because of India’s withdrawal of MFN status to Pakistan, it gains special significance.
All you need to know about MFN for answering questions in Prelims-
What Is the Most-Favoured Nation Clause?
The Most Favoured Nation clause is the first clause in the General Agreement on Tariffs and Trade (GATT) by the World Trade Organisation (WTO). It is a treatment accorded by one state to another to ensure non-discriminatory trade practices between the two countries vis-à-vis other trade partners.
A most-favoured nation (MFN) clause requires a country to provide any concessions, privileges, or immunities granted in a trade agreement to one nation to all other World Trade Organization member countries. Although its name implies favouritism toward another nation, it denotes the equal treatment of all countries.
Most-Favoured Nation Clause Explained
In international trade, MFN treatment is synonymous with non-discriminatory trade policy because it ensures equal trading among all WTO member nations rather than exclusive trading privileges. For example, if one nation reduces tariffs by 5% for one nation, the MFN clause states that all WTO members will have their tariffs cut by 5% into that nation.
Remember-Its related to WTO.
When did India grant MFN to Pakistan?
India gave Pakistan the status in 1996, a year after the WTO was formed. Bilateral trade between the two Southeast Asian neighbours is pegged at $2 billion. They trade in commodities and goods including sugar, cement, chemicals, cotton, vegetable and fruits, mineral fuels and salts.Pakistan never gave MFN status to India.
One should also know about National Treatment.
National Treatment
The principle of giving others the same treatment as one’s own nationals. GATT Article 3 requires that imports be treated no less favourably than the same or similar domestically-produced goods once they have passed customs. GATS Article 17 and TRIPS Article 3 also deal with national treatment for services and intellectual property protection.Its also related to WTO.
Utilized in many treaty regimes involving trade and intellectual property,it requires equal treatment of foreigners and locals. Under national treatment, a state that grants particular rights, benefits or privileges to its own citizens must also grant those advantages to the citizens of other states while they are in that country. In the context of international agreements, a state must provide equal treatment to citizens of the other states participating in the agreement. Imported and locally produced goods should be treated equally — at least after the foreign goods have entered the market.
We are providing compilation of all such terms associated with economic international bodies to IASNOVA PRO subscribers.Recently Questions have been coming in related to this topic in prelims.
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