The Australian side acknowledged that Pakistani goods are facing higher tariffs but explained that they were in the process of phasing out their MFN tariffs
, however they agreed to consider Pakistan's proposal of creating a level playing field either through a formal arrangement or may be through change of category in the Developing Country tariffs of the Australian System of Tariff Preferences.
Acknowledging Pakistan's concerns, the Australian authorities said they were phasing out their MFN tariffs
As noted in the introduction, a 'MFN Brexit' in which the UK imposes MFN tariffs
on imports from the EU and manages rather little co-operation on other aspects of trade remains a possibility even if not an objective.
194) It is unlikely that an ACP country would join the WTO if it already enjoys a cushy PTA with a set dispute settlement process and tariff barriers lower than the MFN tariffs
under the WTO.
In addition as was the case between Japan and Thailand when a temporary reversal meant that the FTA preferential tariff was actually higher than the MFN tariff
utilizing an FTA can sometimes actually be detrimental so companies must also be careful to make comparisons against MFN tariffs
Products from the United States and the European Union-two of the Philippines' biggest trading partners with whom Manila has yet to sign an FTA-are covered by MFN tariffs
With a new accord under the WTO, the general level of MFN tariffs
may fall in the range of 3-4%, rendering GSP Plus less consequential in the future.
It is notable that two-thirds of goods attracting MFN tariffs
in excess of 15% were not granted preferences under any PTA.
On the one hand, lower preferential tariffs within these free trade agreements no longer offer much of an advantage because non-preferential tariffs ('most-favoured nation' or MFN tariffs
in WTO jargon) are already low.
As members of the World Trade Organization (WTO), each NAFTA country is generally required to apply its MFN tariffs
to all other WTO members.
The only realistic solution will be to reduce global MFN tariffs
to such negligible levels that PTAs no longer matter.
Fourth, preferential tariffs should not be defined in absolute terms, but should be set relative to MFN tariffs