What is Most Favored Nation Trade (PNTR)

11.03.2022       

On March 11, 2022, US President Joe Biden is expected to announce the launch of the procedure for the abolition of Most Favored Nation Trade. may, by its decision, cancel this regime, since the regime is established within the framework of the World Trade Organization (WTO), and the agreements within the framework of the WTO are approved by Congress. In turn, the Congress has already launched a draft of such a legislative act, which received the support of two parties. According to CNN, Joe Biden will urge the G7 and the EU to follow the US lead on the issue of abolishing the most favored nation treatment in trade. Expert Avtandil Mammadov explained what is TEK-TV's MFN.

What is MFN in legal terms?
In expanded form, the principle of Permanent normal trade relations (PNTR) or in Russian RNB is contained in Article I of the GATT-1994 and Article II of the GATS. It means that any benefit or privilege granted by one WTO member state to a product, service or service provider of another state immediately and unconditionally extends to other members of the WTO. In other words – goods, services and suppliers, when they are imported into the territory of another country, must enjoy the same benefits, privileges, advantages and other benefits as goods services and providers from any other country. All trade benefits, such as low tariffs, that any other country receives must be provided. Thus, a country with MFN status cannot be discriminated against, nor can it be treated worse than any other country with similar status.

What would the abolition of most favored nation trade (MFN) mean in practice?
The United States and another country that would abolish The MFN may apply special rules in trade, for example:
-arbitrary increase in tariffs, as well as the possibility of introducing separate fees for goods from a given country;
-obligation to obtain prior approval (and possibly licensing) of trade transactions;< br /> - a special procedure for customs clearance of goods, for example, a detailed inspection of goods with preliminary placement in isolated sensitive areas;
- mandatory certification of certificates of origin of goods, other shipping documents in the consular service.

According to the Center international trade under the UN Commission on Trade in 2021, the volume of Russian exports to the United States amounted to 17.747.387.000 USD, of which 8.950.825.00 USD is the 27th group of goods - mineral fuels, oil and oil products. Since this group of products is already banned, everything else remains, which amounts to 8.796.562.000 USD. According to there are about 50% of total trade in 2021 may be in difficult mode and exports to the US are hampered. In my opinion, the withdrawal of the United States from the MFN in trade with Russia is unpleasant for the Russian economy, but not dramatic, but the problem is that the US is urging the G7 countries and the EU to follow suit. Here it is important that each country act on the basis of its own national interests.

The biggest battles around the MFN were in connection with China. US imports from China more than quadrupled between 2000 and 2015, causing US manufacturing jobs to fall. There have been several attempts to annul the MFN with China. The most serious was taken in 2005, when Rep. Bernie Sanders introduced legislation that would abolish permanent normal trade relations with China. Rep. Sanders said in the House at the time, "Anyone who looks objectively at our trade policy with China should come to the conclusion that that it is an absolute failure and needs to be radically reconsidered.