The full form of MFN is Most-Favoured-Nation treatment (MFN), also known as normal trade relations, which is a strategy for establishing equal trading opportunities among states by initially making multilateral agreements. It guarantees trading opportunities equal to those accorded to the most-favoured nation. It establishes the sovereign equality of states regarding the trading policy as a principle of public international law. It offers a legal foundation for competitive foreign transactions as an instrument of economic policy.
Several commercial treaties had most-favoured-nation clauses at the beginning of the 17th century. Richard Cobden and Michel Chevalier negotiated the Anglo-French treaty in 1860, which provided mutually reinforcing tariff concessions and extended the most favourable-nation status to all countries. This deal served as the template for numerous subsequent agreements.
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The most-favoured-nation principle has always applied primarily to import duties, but specific provisions have expanded its application to other areas of international economic contact, such as the establishment of businesses by nationals of one country on the territory of another, navigation in territorial waters, real and personal property rights, and intangible property rights like patents, industrial designs, trademarks, copyrights, and literary property.