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Significance of Most-Favoured-Nation terms in global trade: A comprehensive analysis

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  • Gonciarz, Tomasz
  • Verbeet, Thomas

Abstract

The Most-Favoured-Nation (MFN) principle has historically been instrumental in promoting stability and equitable trade conditions. In recent decades there has been a rise in bilateral and regional trade agreements, which deviate from the MFN principle in providing more favourable tariff treatment to specific partners. At the same time, WTO Members can, under certain circumstances, raise trade barriers against imports for different reasons, including to counter unfair trade practices. Using a novel and comprehensive dataset based on customs data submitted by WTO Members to the WTO's Integrated Database and complemented by other sources, this paper provides an in-depth analysis of global merchandise trade flows under both MFN and preferential tariffs. The methodology takes into account trade remedies, including anti-dumping and countervailing duties, additional duties in the US and China, and the utilization of trade preferences by incorporating preferential tariffs and bilateral trade flows for 184 economies. The research highlights the nuanced effects of MFN trade across different economies, regions, product and income groups, and compares MFN treatment on imports and exports. The paper concludes that more than 80% of global trade in goods is conducted on MFN terms and underscores the continued importance of the multilateral framework for the global trading system.

Suggested Citation

  • Gonciarz, Tomasz & Verbeet, Thomas, 2025. "Significance of Most-Favoured-Nation terms in global trade: A comprehensive analysis," WTO Staff Working Papers ERSD-2025-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:308810
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    File URL: https://www.econstor.eu/bitstream/10419/308810/1/1915112524.pdf
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    References listed on IDEAS

    as
    1. Fugazza, Marco & Nicita, Alessandro, 2013. "The direct and relative effects of preferential market access," Journal of International Economics, Elsevier, vol. 89(2), pages 357-368.
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    More about this item

    Keywords

    World Trade Organization; International Trade; Most-Favoured-Nation; Regional Trade Agreements; Preferential Trade Arrangements; Preference Utilization; Trade remedies; Antidumping and Countervailing Duties;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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