The United States, the European Union, Britain, Canada and Japan are to move jointly to revoke Russia’s “most favoured nation” (MFN) status over its invasion of Ukraine.

What is MFN status?

• The World Trade Organization’s 164 members commit to treating other members equally so they can all benefit from each other’s lowest tariffs, highest import quotas and fewest trade barriers.
• This principle of non-discrimination is known as most favoured nation (MFN) treatment.
• There are some exceptions, such as when members strike bilateral trade agreements or when members offer developing countries special access to their markets.
• For countries outside the WTO, such as Iran, North Korea, Syria or Russian ally Belarus, WTO members can impose whatever trade measures they wish without flouting global trading rules.

Removal of MFN status

• There is no formal procedure for suspending MFN treatment and it is not clear whether members are obliged to inform the WTO if they do so.
• India suspended Pakistan’s MFN status in 2019 after a suicide attack by a Pakistan-sponsored group.
• Pakistan never applied MFN status to India.

What does losing MFN status mean?

• Revoking Russia’s MFN status sends a strong signal that the US and its Western allies do not consider Russia a economic partner in any way, but it does not in itself change conditions for trade.
• It does formally allow the Western allies to increase import tariffs or impose quotas on Russian goods, or even ban them, and to restrict services out of the country.
• They could also overlook Russian intellectual property rights.
• Ahead of MFN status removal, the United States had already announced a ban on imports of Russian oil and gas.

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