Most Favored Nation

Most favored nation treatment is a clause in international trade according to which a state is contractually obliged to grant partner countries foreign trade privileges, for example import facilitations that it grants to the most favored third countries. It is common for a country that accepts most favored nation treatment to demand the same behavior from its partner countries. The principle of non-discrimination applies = all trading partners should, in theory, be treated equally.

The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) build on these principles and form the legal framework for the liberalization of world trade. But only economically strong countries can afford unconditional free trade. Developing countries in particular point to their lack of competitiveness and demand exceptions to the principle of most-favored-nation treatment in order, for example, to be able to impose much higher tariffs on imported goods than is the case with their exported goods. The WTO allows temporary exemptions from most-favored nation treatment in free trade zones or economic communities.

Further explanation:
Der Grundsatz der Meistbegünstigung konkretisiert das Prinzip der Gleichbehandlung (Diskriminierung). Bedeutung erlangen Meistbegünstigungsklauseln im Außenhandel, im Bereich der Zölle und bei indirekten Steuern. Tarifäre Trade barriers und mengenmäßige Beschränkungen werden demzufolge gleich behandelt.

The principle of most favored nation treatment applies above all to the trade agreements of the World Trade Organization. Trade advantages granted to a state and non-members of the WTO apply to all states of the trade organization. The member states are obliged not to treat services and providers of services from WTO states less favorably than non-WTO states.

The relationship between the principle and intergovernmental agreements (tax agreements) is problematic. If the most-favored nation treatment is consistently applied, advantages under treaty law that are granted to another contracting state (e.g. exemption of income) would also have to be granted to all other DTA states.

In den deutschen Steuerabkommen mit osteuropäischen Staaten wird das Prohibition of Discrimination in abgeschwächter Form nach dem Meistbegünstigungsgrundsatz vereinbart. Die Anwendung der Meistbegünstigung in Steuerabkommen wird jedoch insgesamt von den internationalen Institutionen abgelehnt.

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