The most-favoured-nation (MFN) principle is a
cornerstone of the multilateral trading system conceived after World
War II. It seeks to replace the frictions and distortions of
power-based (bilateral) policies with the guarantees of a
rules-based framework where trading rights do not depend on the
individual participants’ economic or political clout. Rather, the
best access conditions that have been conceded to one country must
automatically be extended to all other participants in the system.
This allows everybody to benefit, without additional negotiating
effort, from concessions that may have been agreed between large
trading partners with much negotiating leverage.
In the context of the GATS, the MFN obligation
(Article II) is applicable to any measure that affects trade in
services in any sector falling under the Agreement, whether specific
commitments have been made or not. Exemptions could have been
sought at the time of the acceptance of the Agreement (for acceding
countries: date of accession). They are contained in
country-specific lists, and their duration must not exceed ten years
in principle.
