The Most Favoured Nation (MFN) Clause under WTO regime is based on the principle of

The Most Favoured Nation (MFN) clause is a cornerstone of the World Trade Organization (WTO) regime, fundamentally based on the principle of non-discrimination between trading partners [2]. Under this rule, if a WTO member grants a special favor, such as a lower customs duty rate, to one nation, it must extend that same treatment to all other WTO members [3]. This ensures that every member is treated equally, regardless of their economic strength [3]. While the term 'most-favoured' might imply special status, in practice, it mandates that no nation is treated less favorably than any other. It differs from the 'National Treatment' principle, which focuses on non-discrimination between local and foreign products [3]. Thus, the MFN clause prevents discriminatory trade practices between different nations, fostering a level playing field in international commerce [4].

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 1. Trade without discrimination: > p. 379
2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > 1. Most Favoured Nation (treating other partners equally) > p. 538
3. [3] https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm
4. [4] https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm