Joining the World Trade Organization

Admission Principles

However, in the WTO process, there are 2 principles that are important to a WTO member application process. The first is the “MFN” status. MFN stands for the “Most Favored Nation” status within the WTO. If a nation has a MFN status, then it has open access to the good trading deals or an agreement it likes between 2 other member states. So basically, if you have MFN, you can trade use a favorable trading policy of another member to trade with a 3^rd WTO member. One example would be the USA. If a WTO member makes a lucrative trade deal with the UK, the USA can make that same exact deal with the UK because the US has the “MFN” status. There are of course exceptions to this deal and usually those exceptions only apply when 3^rd world nations deal with the powerful nations like the Western Nations.

The other principle that is important is the principle of “nation treatment.” It is the idea of treating every nation and their “companies” and assets as you would treat your citizens. Every company and every nation should be treated on the same playing field. The problem with this idea is that countries like Venezuela, India or Russia has companies that are state owned. Normally that won’t matter because these nations are not WTO members but the problem arises when nations with government owned companies join the WTO. How can a government that owns companies ensure fair trading policies and fairness for foreign companies that come into their country? Thus this idea has a lot of litigation in the WTO and the most recent example includes the China-US litigations about Chinese market practices that are unfair to foreign investors and companies.