No MFN status to Pakistan: What is MFN

New Delhi:  Prime Minister Narendra Modi will chair a high-level meetingtoday to discuss withdrawing Most Favoured Nation (MFN) status  to Pkistan. India had granted MFN status to Pakistan in 1996, but Pakistan has not reciprocated till date. Here is what MFN is all about.

1.Meaning of MFN
MFN is a status granted by a trading partner to the other country giving an equal treatment in terms of trading prices or tariffs (duties), access to market without discrimination in imports and exports. MFN does not imply special treatment, it simply means that there will no discrimination in terms of trade.

2.What MFN means in practise
 When a nation receives MFN status, it is expected to decrease duties and open its market  for trade on more items ensuring free flow of goods. Thus, it means lowest possible duties, least trade barriers and  highest import quotas for each other

3.Advantages of MFN
MFN status is particularly helpful for developing countries,  as it ensures easy access to a wider market for export and less trade barriers. The price of export items go down because of less duties thus making the items competitive  vis-a-vis competitors. MFN also cuts down redtapism and boosts the export sector leading to more forex earnings and jobs.

4.Disadvantages of MFN
A country has to give same status to all WTO-member trading partners. This results in price reduction of items being imported which in turn may increase imports and affect the domestic manufacturers. Essentially, what this means is that imported items may become cheaper than those produced in the country.
News 24 Bureau