What is MFN? Know all about 'Most Favoured Nation' status and how its withdrawal will impact Pakistan

India has withdrawn "Most Favoured Nation" or MFN status accorded to Pakistan after an attack on CRPF convoy killed 44 jawans in Jammu and Kashmir’s Pulwama district. The decision was taken in a meeting attended by Defence Minister Nirmala Sitharaman, Home Minister Rajnath Singh, Minister of External Affairs Sushma Swaraj and Arun Jaitley at the CCS meeting at Prime Minister Narendra Modi’s residence at 7, Lok Kalyan Marg. More than 2,500 Central Reserve Police Force personnel, many of them returning from leave to rejoin duty in the Valley, were travelling in the convoy of 78 vehicles when they were ambushed on the Srinagar-Jammu highway at Latoomode in Awantipora in south Kashmir. 

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What is MFN status?

Most favoured nation (MFN) is the level of treatment accorded by one state to another in international trade. It is basically accorded to ensure non-discriminatory trade between all partner countries of the WTO. The WTO is the only global international organisation dealing with the rules of trade between nations. In the first agreement on Tariffs and Trade (GATT), it is mentioned that a country which provides MFN status to another country has to provide concessions, privileges, and immunity in trade agreements. The primary purpose of the WTO is to open trade for the benefit of all.

It leads to equal treatment amongst countries and ensures a more stable, predictable, reliable and competitive international trade.

India and Pakistan have no formal bilateral trade agreement. India granted the MFN status to Pakistan in the year 1996. SAARC countries, Bangladesh, Maldives, Nepal, Pakistan and Sri Lanka are members of WTO and except Pakistan, these countries have extended MFN status to India.

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On January 4, 2018, the junior External Affairs Minister had told Rajya Sabha in a written reply: “Presently, no proposal to review Most Favoured Nation status to Pakistan is under consideration. India has accorded Most Favoured Nation Status to all WTO members, including Pakistan, in accordance with provisions of Article 1 of General Agreement on Tariffs and Trade, 1994. It is unfortunate that Pakistan has not fulfilled its international obligations in this regard, so far."