Most Favored Nation

Most-favored-nation treatment isa term that in international economic relations determines the status of a country that enjoys reduced tariffs and reductions in trade barriers. It is awarded to two (or more) countries that have trade agreements.

Thus, all WTO member countries receive this status. This means that they have equal trading benefits. This is extremely important for small countries participating in trade agreements, since it gives the right to reduce the cost of exports, making them competitive. The country that received the status of the NLF can not be considered less useful than any other developed (with status), having a promising economy. Thus, the most favored nation treatment increases the export and economic development of the state. Exceptions take into account the preferential treatment of developing countries, regional free trade zones and customs associations.

The drawback of the MFN is that some countriesThey can not protect their industrial sectors from cheaper goods produced by foreign partners. And this problem is especially exciting. For example, when a state has to export cheap food products to the American market, it, in fact, loses its agriculture, as local farmers are not able to compete with subsidized food products in the US and the EU. They are forced to move to cities in search of work. At the same time, traders increase prices, and this leads to food riots.

In any case, the national regime and regimemost favored are considered to be the main principles of WTO trade law. The first means that foreign companies in the trading partner countries have equal positions with local companies.

Historical roots of the status can already be found ineleventh century. But in its modern form it began to appear in the eighteenth century. In the early years of the development of international trade, it was used between the two countries. In 1794, the United States granted the "United States Treaty of Jay" the trade status of Great Britain.

In the late 19th and early 20th centuries, in connection with the situation,When the strongest Western empires, the most-favored-nation regime was imposed, in fact, forcibly on the Asian countries, it was seen as an instrument of predatory politics. One of the vivid examples of such unequal relations aimed at plundering the economy of weaker states is the Treaty of Nanking (1842) between the Ch'ing Empire (China) and Great Britain, concluded after the First Opium War, over which Great Britain received the island of Hong Kong.

The Korean history textbook says thata trade treaty with the United States of 1882 - an unequal agreement that allowed the United States to obtain unjust privileges from the Joseon dynasty. However, many people consider the most favored nation treatment as favorable for countries with underdevelopedeconomy, giving the opportunity to protect their interests. It is likely that they are right. As you know, superpowers in the past, if desired, would not be able to destroy completely the economy of weaker countries, regardless of whether they have a status or not.

After the end of the Second World War, tradecontracts were concluded simultaneously between many countries through the General Agreement on Tariffs and Trade, which ultimately led in 1994 to the WTO.

The WTO agreements are very complicated, confirmedlegal documents covering a wide range of activities. They concern agriculture, textile industry, banking, telecommunications, public procurement, industrial standards, product safety, food hygiene rules, intellectual property and much more. The main principle is that the WTO requires that participants grant each other the most favored nation treatment. Trade experts believe that many MFN points have great advantages, and tend to promote trade relations without discrimination and free trade in general.