Most favoured nation duties
The content in this section is only included to help explain the standard,
provide examples or make recommendations about use. It does not contain requirements for complying with the standard
and is not governed by the formal standards process. The information may not have been updated to accurately reflect
Government policy.This section is not part of the standard
What most favoured nation is
Most favoured nation (MFN) is a principle of the World Trade Organization (WTO).
It means members of the WTO cannot usually discriminate between their trading partners.
Countries must offer access to their market on the same terms for all members of the WTO.
Any favour offered to one country must be offered to everyone. For example, if you offer a lower rate of customs duty to a country for one of its products, you must do the same for all countries.
Exceptions to most favoured nation
There are some exceptions to MFN treatment.
Free trade agreements
Countries can negotiate a free trade agreement.
Free trade agreements set out the rules that cover trade between 2 or more countries.
They aim to make trading easier between only those countries. They do this by reducing the restrictions on imports and exports between them. Learn more about how free trade agreements work.
Read about the UK’s trade agreements on GOV.UK.
Trading with developing nations
Countries can give developing nations special access to their markets. These are known as unilateral preferences.
Eligible countries can pay less or no duties on some goods they import under the UK Generalised Scheme of Preferences (GSP). Read more about GSP on GOV.UK.
Trade barriers
Countries can make it more difficult for other nations or traders to import products they believe are being traded unfairly. They do this by raising trade barriers.
Trade barriers can include:
- taxes on imported goods
- import quotas or price controls (including limits on the amount of goods that can be imported)
- requirements for goods to be locally produced
Read about trade barriers on GOV.UK.
Creating MFN duties in the tariff
There are about 24,500 commodity codes in the Tariff.
Every commodity code must have one or both of the following MFN measure types attached to it:
- 103 (Third country duty)
- 105 (Non preferential duty under end-use)
About 16,500 of the total number of commodity codes are declarable end-lines. An end-line is the most specific classification of a product.
Each end-line has an MFN duty attached to it.
Often, the MFN duty is 0%. However, it does not matter what the duty is, it must be set against the commodity code in the Tariff.
Attaching MFN duties in the commodity code hierarchy
You can attach the MFN duty to any tier in the commodity code hierarchy. All the codes below it in the hierarchy inherit the same duty.
For example, the commodity code for Natural Chilean sodium nitrate is 3102500010.
This is made up of:
- HS chapter: 31 Fertilisers
- HS heading: 02 Mineral or chemical fertilisers, nitrogenous
- HS subheading: 50 Sodium nitrate
- CN subheading: 00 (not set)
- Taric code: 10 Natural Chilean sodium nitrate
If the MFN duty on ‘31 Fertilisers’ is 0%, all the codes below it in the hierarchy inherit the 0% MFN duty.
Read more about commodity codes.
Attaching MFN duties to a geographical area
You must create all MFN duties (103s and 105s) against ‘Erga Omnes’.
Erga Omnes is a Latin phrase which means ‘towards all’ or ‘towards everyone’. In trade terms, Erga Omnes is the geographical area group which covers the whole world.
Erga Omnes has a geographical area ID of 1011. This country group includes the UK.
There is also a country group called ‘All third countries’. This group has the ID 1008. This country group excludes the UK.