What is the Full form of MFN?
The MFN full form is the Most Favoured Nation. MFN is a level of respect accorded by one country to another in international trade in which the host country enjoys the more favorable trade terms offered by the issuing country. According to this classification, the state receiving this treatment must obtain the same fair trade benefits from the issuing government as other countries.
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The leaders of the WTO (World Trade Organization) agree to grant each other MFN status. It is favorable for trade agreements because it permits any nation to have the most access to foreign markets without quotas and tariff restrictions.
Guidelines of MFN
- The MFN principle was based on the notion that a government must treat all of its trade agreements equally. In other words, a nation cannot favor a specific nation in commercial affairs more than its other trading partners.
- The specific definition of the MFN designation is trade without discrimination, which is a different meaning as it stipulates that the nation gaining the MFN status will not be disadvantaged by the issuing country in commercial affairs.
Benefits of MFN
- According to trade specialists, a nation that gets MFN status may enjoy the following benefits:
- Small or emerging nations benefit from MFN because they can acquire access to larger global markets.
- It minimizes the export costs of the MFN countries, making their goods more competitive.
- It reduces the number of import duties.
