Most-Favored-Nation Status


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Most-Favored-Nation Status

 

one of the most important principles of international law for the regulation of economic and commercial relations between states.

Most-favored-nation status signifies that each of the negotiating states is obliged to extend to the other certain specified rights, advantages, privileges, and preferences as favorable as those extended or to be extended in the future to any third state. Commercial treaties frequently provide for the expansion of most-favored-nation status into the area of trade prohibitions and restrictions; this would suggest that the granting of most-favored-nation status ordinarily consists of applying certain preferences or easing certain restrictions on equal footing with any third state to which such concessions have been extended. The customs system, which provides for the imposition of specific duties or taxes and for general rules and procedures for the handling of goods, is the most important specific area in which most-favored-nation status has been introduced.

Commercial treaties frequently grant most-favored-nation status in such specific areas as internal taxes and other charges levied on the production, processing, and circulation of imported goods; rules and procedures applied in the transit of goods; legal standing of foreign nationals and other juridical persons; and conditions of navigation.

An important issue relating to most-favored-nation status is that of exceptions to it; like the status itself, these are established by agreement. The most typical exception pertains to regulation of border commerce, generally referred to as the neighbor clause. In 1964 the United Nations Conference on Trade and Development (UNCTAD), meeting in Geneva, urged that developed states extend unilateral concessions to developing states without extending these same concessions to other developed states. It was also recommended that the developed states not grant preferences among themselves that would nullify those awarded by the developing states to one another.

The principle of most-favored-nation has become widespread in contemporary international relations. In “Principles Governing International Trade Relations and Trade Policies Conducive to Development,” a document adopted in 1964 by UNCTAD at its Geneva session, it is pointed out that international trade should be mutually beneficial and should be conducted on the principle of most-favored-nation. Trade agreements concluded along these lines should never constitute actions harmful to the commercial interests of other countries.

The extension of most-favored-nation status is basic to trade agreements concluded by the socialist states both among themselves and with the capitalist states. As of Jan. 1,1973, the USSR had commercial treaties calling for the mutual granting of most-favored-nation status with more than 80 states. Capitalist states frequently violate the principle of most-favored-nation to discriminate against the socialist states, denying them equal opportunities, privileges, and preferences.

E. K. MEDVEDEV

References in periodicals archive ?
16) Vladimir Pregelj, Restoring Most-Favored-Nation Status to Romania, Washington DC: Congressional Research Service, CRS Report for Congress-93-584 E, June 14, 1993, p.
Most-favored-nation status in the WTO is based on giving all members treatment equivalent to the best treatment afforded any individual WTO member, said Brad Smith, managing director of international relations for the American Council of Life Insurers.
A series of flash points in US-China relations loom--arms sales to Taiwan, most-favored-nation status, Beijing's bid for the Olympic Games, missile defense systems.
According to trade sources, maritime transport services lack ''the very basics of trade rules'' such as most-favored-nation status.
I'm in favor of China being awarded most-favored-nation status because I think it recognizes an economic reality.
Japan and South Korea began talks last September on concluding an investment treaty under which the two countries would grant each other most-favored-nation status, as well as treat each other's companies the same as domestic firms before cross-border investment is made.
For its membership to be meaningful, however, Congress must vote to grant China permanent most-favored-nation status.
That's why I oppose most-favored-nation status (for communist China).
Newer, too, was the wholesale co-optation of Chinese artists, who have apparently been granted most-favored-nation status, supplanting the Brits and the Japanese.
The amendment tied those numbers to Most-Favored-Nation status for the Soviet Union.
Normal trade relations (NTR), as most-favored-nation status is now called in the U.
Gephardt, however, also says and does things that pluck heartstrings on much of the Right: He was in the forefront of House opposition to continued most-favored-nation status for the People's Republic of China and led House Democrats to vote to place the burden of proof on the IRS instead of the taxpayer.