Discrimination in International Trade: The Most-Favored-Nation Obligation

Abstract:     
This paper explores the meaning and application of the most favored-nation obligation in international trade relations. In
focusing on the MFN obligation contained in the General Agreement on Tariffs and Trade it considers how the obligation in a multilateral context differs from the historical use in bilateral agreements. The paper further analyzes the concept of "like products" used to determine the existence of discrimination. Economic concepts such as cross-elasticity of supply and demand are considered but they seem to only partially capture the proper legal application of the MFN obligation. The paper concludes based on analysis and some historical evidence that the notion of like products is context sensitive and differs substantially in accordance with the regulatory purpose asserted.

JEL Classification: F13, F14

working papers series