Milwaukee, Oct 3 (IANS) G20 trade ministers have opened a potentially far-reaching debate over changing the Most-Favoured Nation principle, a cornerstone of the global trading system, with some members signalling willingness to consider treating trading partners differently under certain circumstances.
The issue was one of four major subjects taken up by trade ministers during their Sept 30-Oct 1 meeting in Milwaukee under the US G20 presidency.
The US presidency argued that the MFN principle had failed to promote reciprocity and balance and could prevent countries from negotiating arrangements designed to address what they regard as unfair trade practices.
The discussions, however, revealed differing views among G20 economies.
Many members described MFN as a cornerstone of the multilateral trading system. But an increasing number of countries “across the development spectrum” indicated that they saw merit in considering how the principle had evolved in practice and how it could be improved, according to the G20 chair’s statement.
A number of members said there could be justification for treating different trading partners differently. The reasons raised included economic security, an unlevel playing field, value-based standards and the development of high-standard marketplaces.
The discussions went beyond a general review of MFN and included several possible ways of changing how the principle operates.
Some members expressed willingness to consider targeted changes to MFN to achieve rebalancing, expanding exceptions to unconditional MFN and issuing legal interpretations that could permit greater use of existing exceptions.
Reviewing Article XXIV of the General Agreement on Tariffs and Trade was also among the possibilities discussed.
Another proposal involved so-called “closed” plurilateral agreements.
Under that approach, countries undertaking stronger commitments would receive MFN treatment, while the benefits of an agreement would accrue only to countries participating in it.
Several members also proposed making trade remedies faster, more automatic and more directly targeted at the source of trade distortions.
US Trade Representative Jamieson Greer said after the ministerial that the discussions indicated growing interest in examining the principle.
“I’m encouraged that members across the development spectrum indicated that they see merit in considering how the MFN principle might be improved to address today’s global trade environment,” Greer said.
The chair’s statement described the Milwaukee discussions as the beginning rather than the conclusion of the process.
“Overall, the wide range of views expressed by G20 members underscored that these sessions marked the beginning of a serious and necessary deliberation about MFN reform,” it said.
The MFN debate formed part of a broader examination of the international trading system at the Milwaukee ministerial. The other three priorities were the weaponisation of food through coercive trade measures, structural excess capacity and production, and eliminating forced labour in global supply chains.
Under the MFN principle, WTO members generally extend the same trade advantage granted to one member to other WTO members, subject to permitted exceptions. The Milwaukee discussions did not produce an agreement to change the principle. Instead, they recorded a range of proposals and differing views that could form the basis for further deliberations.
The United States holds the G20 presidency in 2026. The chair’s statement said Washington looked forward to the United Kingdom assuming the presidency in 2027.
–IANS
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