Most-favored-nation treatment

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(MFN) A commitment that a country will extend to another country the lowest tariff rates it applies to any third country. MFN is a basic principle of the General Agreement on Tariffs and Trade (GATT) (1947). Almost all countries are effectively accorded permanent MFN status by the United States. However, Title IV of the Trade Act of 1974 established conditions on U.S. MFN tariff treatment to certain non-market economies, one of which is certain freedom-of-emigration requirements (better known as the Jackson-Vanik amendment). The Act authorizes the President to waive a country’s full compliance with Jackson-Vanik under specified conditions, and this must be renewed by June 3 of each year. Once the President does so, the waiver is automatic unless Congress passes (and sustains a Presidential veto of) a disapproval resolution. MFN status for China, which had been originally suspended in 1951, was restored in 1980 and has been continued in effect through subsequent annual Presidential extensions. Since the Tiananmen Square incident in 1989, however, the annual renewal of China’s MFN status has been a source of considerable debate in the Congress. Several Members have sought through legislation to terminate China’s MFN status or to impose additional conditions relating to improvements in China’s actions on various trade and nontrade issues. Agricultural interests generally have opposed attempts to block MFN renewal for China, contending that several billion dollars annually in current and future U.S. agricultural exports could be jeopardized if that country retaliated.

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