Trade

Why the most-favoured nation principle matters for business 

  • 5 March 2025

A rules-based global trading system, with the World Trade Organization’s (WTO) most-favoured nation (MFN) principle at its core, provides the stability and predictability that businesses require for strategic planning, investment decisions, and day-to-day operations.

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In today’s interconnected global economy, understanding the rules that govern international trade is essential for businesses of every size, everywhere.  

The most-favoured nation principle is a cornerstone of the WTO that ensures countries do not discriminate between their trading partners. According to the WTO, over 80% of global merchandise trade are conducted on most-favoured nation terms. 

But while the principle is one of the most fundamental WTO concepts, it is also frequently misunderstood. 

This paper explains:  

  • What the most-favoured nation principle is in practical terms and common misconceptions 
  • How the principle relates to reciprocal and retaliatory tariffs 
  • How it impacts businesses and consumers 
  • Its importance for business operations, whether or not the business exports goods 
  • Its role in promoting equality and fairness in international trade 

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