Working Paper: CEPR ID: DP2859
Authors: Henrik Horn; Petros C. Mavroidis
Abstract: The Most-Favored Nation clause (MFN) forbids Members of a trade agreement to discriminate between trading partners. It is typically seen as one of the main features of the multilateral trading system, and appears in several of the agreements in the World Trade Organization. There seems to be a rather widespread belief among policy makers that there are strong economic rationales for the MFN provision. The purpose of the Paper is to survey economic theory that may shed light on whether this view is well founded or not, and to summarise salient features of the case law as it concerns MFN.
Keywords: most-favoured-nation clause; nondiscrimination in trade
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MFN clause (F23) | trade liberalization (F13) |
| MFN clause (F23) | welfare (I38) |
| discriminatory tariffs (F18) | social desirability (Z13) |
| MFN principle (F23) | tariff negotiations (F13) |
| MFN principle (F23) | non-tariff barriers (F13) |