Normal-Trade-Relations (Most-Favored-Nation) Policy of the United States [Updated October 20, 2005]   [open pdf - 138KB]

"In international trade, the term most-favored-nation (MFN) treatment has a meaning at variance with what it appears to mean: the expression means equal--rather than exclusively favorable--treatment and is often used interchangeably with 'nondiscriminatory.' To make this distinction clearer and avoid a possibly misleading interpretation of the most-favored-nation term, legislation was enacted in 1998 to replace it in U.S. law with the term 'normal trade relations,' or NTR. In this report, both terms are used interchangeably with 'nondiscriminatory.' The United States accords general MFN treatment as a matter of international obligation as well statutory policy to all trading partners; however, MFN tariff treatment of several countries has been suspended under specific legislation. Virtually all such suspensions, initially applied to 21 countries or political entities, took place under the mandate of the Trade Agreements Extension Act of 1951, and two more under country-specific legislation. MFN tariff treatment of countries suspended under the 1951 law can be restored and maintained in effect for one-year periods by using the procedure provided under Title IV of the Trade Act of 1974 for such restoration to 'nonmarket economy' (NME) countries. Under this procedure, an NME country needs to conclude with the United States a trade agreement containing a reciprocal MFN clause, and be in compliance with the criteria of the Jackson-Vanik (J-V) freedom-of-emigration provision of that act. The two countries whose MFN status was suspended by country-specific legislation could--and did--have it restored by Presidential action under conditions specified in the suspending law."

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CRS Report for Congress, RL31558
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