Most-Favoured-Nation Standard (MFN) and China
Introduction
One of the most important economies in the world today is that of China. With a population of nearly one and half billion people, and a GDP growth rate of nearly 10% annually since 1978, China represents a significant player on the worlds stage.[footnoteRef:2] China was given permanent MFN status by the US in 2000, which paved the way for Chinas accession to the World Trade Organization.[footnoteRef:3] The effect was two-fold, according to US Sen. Tom Cotton: it led to the offshoring of 2 million US jobs and to a surge of foreign investment in China that made the latter into one of the most powerful nations in the world today.[footnoteRef:4] The questions this paper poses are: What changes have been effected in globalization since China was granted MFN status in 2001, and what changes can be expected now that China has been de-facto removed from this status as a result of the US and 32 countries, including the European Union, the UK, Canada, Turkey, Ukraine, and Liechtenstein ceasing to apply this status to China? In other words, does the MFN standard convey any meaning in todays globalized world for China, as the state is still a major attractor of foreign investment and a major foreign investor around the world? This paper will address the question of whether the most-favored-nation standard (MFN) is a relevant factor in understanding China from a globalization standpoint. [2: World Bank, In China ] [3: Tom Cotton, Bill to End Chinas Permanent MFN Status ] [4: Cotton [n2]]
What is the MFN Standard?
Chinas MFN status is in peril as a result of its enormous growth.[footnoteRef:5] The EU has cancelled Chinas preferential trade treatment, which had provided a universal, non-discriminatory and non-reciprocal preferential tariff for exports of manufactured and semi-manufactured products from developed countries (beneficial countries) to developing countries (beneficiary countries).[footnoteRef:6] Reductions in the tariff rate and exemptions based on MFN status are also include in preferential trade treatment, which means China is no longer receiving a discounted rate on its exports to the EU. Because China still insists that it is a developing country while being the second largest economy in the world and the largest in terms of inward and outward FDI, the EU has taken this step to rectify what it sees as an unfair and untenable situation. [5: Epoch Times, CCP Confirms (2021) < https://www.newsdirectory3.com/the-ccp-confirms-that-32-countries-including-the-european-union-have-cancelled-chinas-preferential-trade-treatment-most-favored-nation-epoch-times/>] [6: Epoch Times [n4]]
The…
