Does Vietnam's special incentives for FTA Partners violate the WTO's Most Favored Nations (MFN) principle?
01/10/2023 30Question: Does Vietnam's special incentives for FTA Partners violate the WTO's Most Favored Nations (MFN) principle?
Answer:
One of the major, overarching principles of the WTO is the principle of non-discrimination, including non-discrimination between goods, services, and investments of other WTO Member countries (principle of Anti-Discrimination). Most Favored Nation Treatment – Most Favored Treatment – MFN). According to this MFN principle, Vietnam must treat WTO Member countries similarly, without giving preference to any Member.
However, the WTO allows Member countries not to comply with the MFN principle if it is involved in an agreement that largely liberalizes trade. Therefore, Vietnam's preferential treatment within the framework of FTAs compared to other WTO Members is consistent with the exception allowed by the WTO on this issue.
Center for WTO and International Trade - VCCI