most-favoured nation clause


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most-favoured nation clause

an underlying principle of the WORLD TRADE ORGANIZATION (WTO) whereby each country undertakes to apply the same rate of TARIFF to all its trade partners. This general principle of non-discrimination evolved out of earlier WTO endorsement of bilateral trade treaties, whereby if country A negotiated a tariff cut with country B, and subsequently country B negotiated an even more favourable tariff cut with country C, then the tariff rate applying in the second case would also be extended to A.