What is the Full form of MFN?

The full form of MFN is the Most Favoured Nation. MFN is a level of respect granted by one country to the other in foreign trade wherein the host country receives the better trade terms offered by the issuing nation. According to this classification, the state which gets this treatment must receive fair trade benefits as other countries receive from the issuing nation.

WTO (World Trade Organization) leaders are accepted on granting each other MFN status. It is very advantageous for trade deals, as it enables every other nation to have the highest access to markets to other nations without quotas & tariff limitations.

Principles of MFN

• MFN ‘s principle depended on the concept that a nation must address all its trade deals equivalently, that is a nation must not favour a particular nation in commercial matters more than its other trading partners.
• The precise definition of the MFN designation is trading without discrimination, that is the sense is different as it specifies that the nation obtaining the MFN status would not be disadvantaged in commercial matters by the issuing country.

Advantages of MFN

A country which achieves the MFN status could experience the following advantages, as per trade experts:-

• MFN is helpful for the small or under developing nations because they can gain access to the broader global markets.
• It reduces the MFN countries’ export costs and therefore allows their goods to be highly competitive.
• It reduces customs duty on imported goods.