Indian government has withdrawn ‘Most Favoured Nation’ (MFN) status accorded to Pakistan.
Making the annoucement, Finance Minister Arun Jaitley has said the Ministry of External Affairs will initiate all possible steps to ensure complete isolation from the international community of Pakistan, which is expected to have a hand in the attack carried out by terror outfit Jaish-e-Mohammed.
MEA will initiate all possible diplomatic steps which are to be taken to ensure the complete isolation from the international community of Pakistan of which incontrovertible is available of having a direct hand in this act. Most Favoured Nation status is given to an international trade partner to ensure non-discriminatory trade between all partner countries of the WTO. A country which provides MFN status to another country has to provide concessions, privileges, and immunity in trade agreements. It is the first clause in the General Agreement on Tariffs and Trade (GATT).
Under rules of the World Trade Organisation (WTO), a member country is not allowed to discriminate between trade partners and if a special status is granted to one trade partner, the country is required to extend it to all members of the WTO.
In a nutshell, MFN is a non-discriminatory trade policy as it ensures equal trading among all WTO member nations rather than exclusive trading privileges. Since India and Pakistan are part of the WTO, both are required to grant MFN status to each other and other partner countries.