MFN Principle

  • It is a principle of WTO’s General Agreement on Tariffs and Trade (GATT)
  • India is a signatory/contracting party to GATT/WTO
  • According to MFN principle, each of the WTO member countries should “treat all the other members equally as ‘most-favoured’ trading partners.”
  • Thus, though the term ‘MFN’ “suggests special treatment, it actually means non-discrimination.”
Why in news? After Uri attack, discussion on removing MFN status to Pakistan
Can India do it?
International trade experts said India could consider making use of a ‘security exception’ clause in the GATT to deny the MFN status to Pakistan or bring in certain trade restrictions.
This is because Article 21(b)(iii) of GATT states that “Nothing in this Agreement shall be construed to prevent any contracting party (including India in this case) from taking any action which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations.”
Pakistan, a founding member of the WTO like India, is yet to grant the MFN tag to India (and Israel).

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