Most Favoured Nation (MFN)
Fundamental WTO principle requiring each member to grant all other members the same trade advantages as those given to the most favoured trading partner.
Core principle
Most Favoured Nation (MFN) treatment is the central pillar of the multilateral trading system. Enshrined in Article I of GATT (1947) and carried over into the WTO agreements, it requires that any advantage granted to one member country be automatically extended to all other members.
Scope and application
The MFN principle covers:
- Customs duties and charges applied on imports or exports
- Methods of levying such duties
- Rules and formalities connected with trade
- Quantitative restrictions (where applicable)
In practice, if the EU applies a 5% customs duty on a product imported from Japan, it cannot apply a higher rate to the same product imported from Brazil (unless specific exceptions apply).
Legitimate exceptions
GATT provides several derogations from MFN:
- Free trade agreements and customs unions (GATT Article XXIV)
- Generalised Scheme of Preferences (GSP) for developing countries (Enabling Clause)
- Waivers granted by consensus at the WTO
Practical implications
Operators should check the applicable MFN rate (conventional duty) in the EU's Common Customs Tariff (TARIC database). This rate represents the maximum applicable ceiling, unless a preferential agreement or trade defence measure applies. The WTO Tariff Download Facility provides MFN rates for all members.