Most Favored Nation

 Most Favored Nation (MFN) status is an economic position in which a country enjoys the best trade terms given by its trading partner. That means it receives the lowest tariffs, the fewest trade barriers and the highest import quotas. That clause is also used in loan agreements and commercial transactions. In the US, it is more common to hear the term 'permanent normal trade relations'. This is simple another way to refer to a country with MFN status. In the early 17th century, several commercial treaties incorporated Most-Favored-Nation Provisions. The Anglo-French Treaty negotiated in 1860 by Richard Cobden and Michel Chevalier which established interlocking tariff concessions that extended Most-Favored-Nation treatment worldwide, became the model for many later agreements. In 1998 the US government officially adopted the name normal trade relation for Most-Favored-Nation status. MFN status is critically important for smaller and developing countries for several reasons. It gives them access to the larger market and lowers the cost of their exports since it lowers trade barriers as much as possible. As a result, their products become more competitive and businesses have more opportunities for growth.