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Free Trade Agreement Most Favoured Nation

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Finally, the five agreements in Table 2 provide for derogations for measures providing for recognition. All but CETA exclude the following: most-favoured-nation relations expand reciprocal bilateral relations, in line with GATT and WTO standards of reciprocity and non-discrimination. In reciprocal bilateral relations, a particular privilege granted by one party extends only to other parties who retort that privilege, while in a multilateral mutual relationship, the same privilege would be extended to the group that negotiated a particular privilege. The non-discriminatory component of GATT/WTO applies a privilege negotiated between them to all GATT/WTO members, regardless of their status in negotiating the privilege. Most-favoured-nation status is granted to an international trading partner in order to ensure non-discriminatory trade between all WTO partner countries. A country that grants most-favoured-nation status to another country must grant concessions, privileges and immunity in trade agreements. This is the first clause of the General Agreement on Tariffs and Trade (GATT). A derogation from the most-favoured-nation clause may be granted to developing countries which may benefit from more favourable treatment than the most-favoured-nation. [6] Barnard, C., Leinarte, E., (2018) “Most favored nation principle: a problem for UK`s financial services?” The UK in a changing Europe In addition to the WTO`s greatest tranquility clauses, the EU has included maximum restraint clauses in a number of its own free trade agreements (FTA). As we will see, the scope of these clauses of the largest cover varies between agreements. In their most comprehensive form, they apply to circumstances other than their WTO counterparts; they serve as safeguards to ensure that preferences granted in a trade agreement are not eroded by the fact that one of the parties subsequently grants better treatment to another country in a future trade agreement. In such cases, the reference clauses provide that all other preferences granted in a future trade agreement must also be extended to the parties to the original agreement. The most-favoured-nation clause allows small countries to participate in benefits they do not normally receive, as they are overlooked among the major players in world trade.

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