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.


References in periodicals archive ?
An example is President Nixon's proposal to grant most-favored-nation status to the Soviet Union during the 1970s.
Joint support for TAPI could -- along with enhanced trade through most-favored-nation status and liberalized visa regimes for business people -- support an effort by Indian Prime Minister Narendra Modi and Pakistani Prime Minister Nawaz Sharif to enhance political ties through commercial opportunities.
Under the accord, Saudi Arabia will give Japan a most-favored-nation status, benefiting Japanese companies operating in the country," said the report, which was not independently verified by Saudi officials yesterday.
The United States welcomed the Government of Pakistan's plans to extend most-favored-nation status to India by the end of the year.
Topics addressed by the volume's 11 chapters include sources of international investment law; the role of soft law in international law; the effectiveness of soft law instruments in international investment law; soft law instruments in environmental, commercial, and GATT/WTO law as potential models; learned lessons from the evolution of investment protection based on public international law treaties; and the relative "ripeness" for codification of principles of expropriation and most-favored-nation status.
All other member states in the World Trade Organization will economically benefit by most-favored-nation status immediately upon Russia's entry.
In 1987, former US ambassador to Romania David Funderburk asserted in his book Pinstripes and Reds" that the US Department of State had been deceived into giving Romania Most-Favored-Nation status and that US diplomats had been hoodwinked by Ceausescu to believe the false pretense of Romania's independence from Moscow.
Congress inserted itself into this debate with passage of the Jackson-Vanik amendment, signed into law by President Gerald Ford on January 3, 1975, which denied most-favored-nation status to countries that restricted emigration.
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.
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.