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most-favored nation

Equal treatment, at least, in international trade. If country A grants country B the status of most-favored nation, it means that B’s exports will face tariff that are no higher (and also no lower) than those applied to any other country that A calls a most-favored nation. This will be the most favorable tariff treatment available to imports. Most-favored nation treatment is one of the most important building blocks of the international trading system. The World Trade Organization requires member countries to accord the most favorable tariff and regulatory treatment given to the product of any one member to the “like products” of all other members. Before the general agreement on tariffs and trade, there was often a most-favored nation clause in bilateral trade agreements, which helped the world move towards free trade. In the 1930s, however, there was a backlash against this, and most-favored nations were treated less favorably. This shift pushed the world economy towards division into regional trade areas. In the United States, most-favored nation status has to be re-ratified periodically by Congress.

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