Question

what are the exceptions to MFN

Answer 1

Exceptions to MFN (Most Favored Nations) are as follows-

1. Customs Union/ Free Trade Areas (GATT Article XXIV)

These areas are contrary to MFN principles because countries inside and outside the region are treated differently. It provides that regional integration may be allowed as an exception to the MFN principle only if the following conditions are met:

(1) Tariffs and other barriers to trade must be eliminated within the region

(2) Tariffs and other barriers to trade applied to outside countries must not be higher than they were prior to regional integration.

2. Non- Application of Multilateral Trade Agreements between particular member states (WTO Agreement Article XIII)-

In the case of non-application of multi trade agreement, benefits enjoyed by other members are not provided to the country of non-application, which leads to results that are different to the MFN principles.

3. Other exceptions

GATT Article XXIV:3 regarding frontier traffic with adjacent (nearby) countries

Article 1:2 regarding historical preferences that were in force at the signing of the GATT

GATT Article XX regarding general exceptions- for measuring necessary to protect life, health, public morale, etc.

GATT Article XXI regarding security exceptions

Reference

Article- “Most Favoured Nation Treatment Principle”