The Most-Favored-Nation Clause Of Reciprocal Trade Agreements

WTO agreements are long and complex because they are pieces of legislation covering a wide range of activities. They cover agriculture, textiles and clothing, banking, telecommunications, public procurement, industrial standards and product safety, food hygiene rules, intellectual property and much more. But a number of simple and fundamental principles can be found in all these documents. These principles are the basis of the multilateral trading system. Overall, agreements that relate entirely or primarily to taxation are excluded from the MFN in all relevant agreements. In addition, all agreements, with the exception of the EU-Canada (« CETA »), enter into trade agreements, whereas in CETA, only Canada makes this exception. [1] This supports the idea that, at least at the time of the signing of CETA, CETA was the most comprehensive trade agreement for services signed so far by the EU, since if the EU had previously given better treatment to another country under an existing free trade agreement, the same treatment should have been extended to Canada in the appropriate dimensions. The status of MFN/NTR for China, a non-market economy, which had been initially suspended in 1951, was restored in 1980 and was implemented by subsequent annual presidential enlargements. However, after the massacre of pro-democracy protesters in Tiananmen Square in 1989, the annual renewal of the status of the Chinese MFN became a source of important debate in Congress; and legislation has been put in place to end China`s NFN/NTR status or to establish additional conditions for improving China`s trade measures and lack of negotiation.

Agricultural interests have generally resisted the attempt to block the renewal of MFN/NTR for China, saying that several billion dollars a year could be put at risk in current and future U.S. agricultural exports if that country is compensated. In the case of China, Congress approved the « Normal Trade Relations » (PNTR) status in P.L. 106-286, and President Clinton signed a law on October 10, 2000. [11] The NRNP paved the way for China`s accession to the WTO in December 2001; it offers U.S. agricultural exporters the opportunity to benefit from China`s WTO agreements to remove trade barriers and open up their agricultural markets. Agreements creating an « internal market » for services and investment are excluded from all agreements, with the exception of the EU-Vietnam, and exclude all agreements which, for the most part, remove all obstacles to the establishment and/or reconciliation of legislation. As shown in Table 2, these exemptions in CETA and the EU-Japan apply only to the EU and are subject to specific reservations in separate annexes. Moreover, in the EU and South Korea, the right to establish and reconcile legislation must be respected in order to be excluded from the MFN, while the other agreements require only one of the conditions. These exceptions will be discussed in more detail in the next section. By the end of the Uruguay Round, developing countries were ready to meet most of the commitments demanded of industrialized countries.

But the agreements have given them transition periods to adapt to the WTO`s more unusual and perhaps more difficult provisions, especially for the poorest least developed countries. A ministerial decision adopted at the end of the round stipulates that the best-off countries should accelerate the implementation of market access obligations imposed by the least developed countries and require more technical assistance.