INDIA ratcheted the pressure on Pakistan by withdrawing the most favoured nation (MFN) status. This is largely symbolic. The gesture is unlikely to affect bilateral trade, which is $2 billion by the usual route and another $6 billion via Dubai and Singapore.

In fact, it can also lead to increased illegal trade between the two countries. Pakistan is yet to give India an MFN status and maintains a list of 1,200 items that are banned for import from India.

The word ‘most’ in the term, MFN, is not used as a superlative degree of adjective. It simply means reciprocal bilateral relationships following both General Agreement on Trade and Tariffs (GATT) and World Trade Organisation norms of reciprocity and non-discrimination. In such relationships a particular privilege granted by one party only extends to other parties which reciprocate that privilege. Readers may refer to the dictionary of economic terms or other sources.

The MFN status is given to an international trade partner to ensure non-discriminatory trade between all partner countries of the WTO.

A country which provides the MFN status to another country has to provide concessions, privileges, and immunity in trade agreements. It is the first clause in the GATT.

According to the WTO guidelines, a member country is not allowed to discriminate between trade partners and if special status is granted to one trade partner, the country is required to extend it to all members of the WTO. It only ensures non-discrimination, which means treating virtually everyone equally.

Saman Malik
Islamabad

Published in Dawn, March 1st, 2019