S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics Seoul Journal of Economics vol.01(3) (Fall 1988)
Tariffs and the Most-Favored-Nation Clause
- Caplin, Andrew; Krishna, Kala
- Issue Date
- Seoul Journal of Economics, Vol.1 No.3, pp. 267-289
- The Most-Favored-Nation Clause (MFNC) has a long history in trade agreements. According to a country most favored nation treatment consists of offering the country a tariff rate at least as low as that offered to any other country on the same commodity. As early as 1226, Emperor Fredrick II extended to Marseilles the same trade privileges previously granted Pisa and Genoa. In 1692, a treaty between Denmark and the Hanse Cities used the term "MostFavored-Nation." In the early 17th century, most European countries insisted on mutual MFN status. More recently, the MFN clause has come into prominence since the articles of GATT require that signatories extend MFN status to all members. Eminent trade theorists such as Viner (1924, 1936, and 1950) and Johnson (1965) and more recently Baldwin and Murray (1977) and Finger (1979) have analyzed the MFNC. But there has been little recent work on the economic effects of the MFNC: notable exceptions are Gruenspecht (1985), and Fries (1987). In contrast, there has been a good deal of interest in MFN from a legal standpoint. Jackson, et al. (1985) is a useful guide to this work. In addition, there has been a good deal of work on customs unions, which is related to the role of the MFN - see Corden (1985) for a useful survey. A selective discussion of the literature appears in the next section.