TOC \o "1-3" \h \z \u INTRODUCTION PAGEREF _Toc478246635 \h 3
WHAT DOES M FN STATUS MEAN ? PAGEREF _Toc478246636 \h 3
GATT : MFN Principle PAGEREF _Toc478246637 \h 4
HISTORICAL BACKGROUND TO THE PRINCIPLE OF MOST FAVOURED NATION (MFN ): PAGEREF _Toc478246638 \h 5
EXCEPTIONS TO THE PRINCIPLE OF GATT PAGEREF _Toc478246639 \h 6
BENEFITS OF MFN STATUS PAGEREF _Toc478246640 \h 7
DRAWBACKS OF MFN STATUS PAGEREF _Toc478246641 \h 8
CASE ANALYSIS : INDIA-PAKISTAN PAGEREF _Toc478246642 \h 10
Indo-Pak Trade Relations PAGEREF _Toc478246643 \h 10
Controversy PAGEREF _Toc478246644 \h 11
India's call for withdrawal of MFN Status to Pakistan PAGEREF _Toc478246645 \h 11
Consequences of Withdrawal of MFN Status to Pakistan PAGEREF _Toc478246646 \h 12
Current Status PAGEREF _Toc478246647 \h 13
CONCLUSION PAGEREF _Toc478246648 \h 14
BIBLIOGRAPHY PAGEREF _Toc478246649 \h 15
With the advent of industrialization and technological advancement the trade relation between the nations of the World saw a sudden boom, thus making the entire world a "Global Village". Rise of this global phenomenon and its resultant impact called for a regulatory regime to control the ills of this newly developed regime. In November 1945, the United States issued a document entitled "Proposals for the Expansion of World Trade and Employment for consideration by an International Conference on Trade and Employment, which was aimed at making a Code of Conduct or detailed Charter relating to various Governmental Restraints including tariffs and quotas on international trade and for the establishment of an International Trade Organization.
This led to the creation of the World Trade Organization (WTO) to cater to the administration of the various International Trade Instruments already in place and govern all future Trade Instruments.
One of the basic principle of World Trade Organization is creating a non-discriminatory international trading plan .This can is clearly enshrined in the two principles of WTO :
The Most Favoured Nation principle 'MFN'
The National Treatment principle.
The Most Favoured Nation and National Treatment principle can be found in all three major International Trade Instrument ; The General Agreement on Tariffs and Trade (GATT) , General Agreement on Trade in Services (GATS ) and Trade Related Aspects of Intellectual Property (TRIPS ) under the umbrella of the World Trade Organization.
WHAT DOES MOST F AVOURED N ATION (MFN0 STATUS MEAN?
In international economic relations and international politics, Most favoured Nation (MFN) Status means a status or a level of treatment accorded by one state to another in international trade.
The term means the country which is the recipient of this treatment must, nominally, receive equal trade advantages as the most favoured nation by the country granting such treatment. Here, Trade advantages include low tariffs or high import quotas. In simple terms it means that, under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.
Most Favoured Nation Status however is apparently a misnomer. It sounds like a contradiction. Though it suggests special treatment, it actually means non-discrimination - treating virtually everyone equally with no exclusive trade benefit.
The importance of MFN can be understood from the fact that it the first clause in the General Agreement on Tariffs and Trade (GATT).
GATT : MFN Principle
Article I General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in para graphs 2 and 4 of Article III, any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.
2. The provisions of paragraph 1 of this Article shall not require
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