MFN Rate (Most Favored Nation)
Standard customs duty rate applied to all WTO members, unless there is a specific preferential agreement.
MFN Rate — Most Favored Nation (MFN)
The MFN rate (Most Favored Nation — MFN) is the rate of customs duties that each member of the World Trade Organization undertakes to apply to imports from all other members, without discrimination.
Fundamental principle
The MFN clause is one of the pillars of the WTO (Article I of the GATT): any trade advantage granted to one country must be extended to all other members of the WTO. Free trade agreements are a permitted exception to this principle.
Application in EU
EU MFN rates are the conventional rates of the Common Customs Tariff. An importer who cannot prove a preferential origin pays the MFN rate.
Practical importance
The MFN rate is the starting point for calculating the benefit of a preferential agreement. If the MFN rate is 12% and the preferential rate is 0%, the saving is 12 points. If the MFN rate is already 0%, the preferential agreement does not provide any additional benefit.
MFN rate vs autonomous rate
Some products have an autonomous rate (decided unilaterally by the EU) lower than the conventional MFN rate. In this case, the lowest rate applies.