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A Geo-Economic Turn in Trade Policy?Most-Favoured Nation Clauses: A Double-Edged Sword in a Geo-Economic Era

A Geo-Economic Turn in Trade Policy?: Most-Favoured Nation Clauses: A Double-Edged Sword in a... [The geo-economic turn in global policy-making has manifested itself not only in the rise of bilateral and regional free trade agreements (FTAs), but also in the more “strategic” design of these FTAs. States increasingly rely on FTA provisions like most-favoured nation (MFN) clauses to secure preferential market access and protect these gains against competitors. While MFN clauses are the cornerstone of the multilateral trade regime that limits possibilities for discrimination, they can also be employed on a bilateral and regional level to ensure that trade partners do not extend more favourable conditions to third parties in future FTA negotiations. To date, we find that the EU makes more frequent use of MFN clauses in FTAs than its trading partners in Asia—with the exception of China. While we observe no clear regional variants of MFN obligations, the trend to include MFN clauses in FTAs—especially in the services and investment chapters—reveals governments’ growing interest in safeguarding their exporters’ interests against third party competition in as many ways as possible. However, as we show, the strategic potential of MFN clauses remains uncertain as there is so far no evidence of active monitoring or enforcement of MFN obligations between trade partners.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Geo-Economic Turn in Trade Policy?Most-Favoured Nation Clauses: A Double-Edged Sword in a Geo-Economic Era

Part of the The European Union in International Affairs Book Series
Editors: Adriaensen, Johan; Postnikov, Evgeny
Bohnenberger, Fabian; Weinhardt, Clara
Springer Journals — Feb 5, 2022
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21 pages

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Publisher
Springer International Publishing
Copyright
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022
ISBN
978-3-030-81280-5
Pages
127 –148
DOI
10.1007/978-3-030-81281-2_6
Publisher site
See Chapter on Publisher Site

Abstract

[The geo-economic turn in global policy-making has manifested itself not only in the rise of bilateral and regional free trade agreements (FTAs), but also in the more “strategic” design of these FTAs. States increasingly rely on FTA provisions like most-favoured nation (MFN) clauses to secure preferential market access and protect these gains against competitors. While MFN clauses are the cornerstone of the multilateral trade regime that limits possibilities for discrimination, they can also be employed on a bilateral and regional level to ensure that trade partners do not extend more favourable conditions to third parties in future FTA negotiations. To date, we find that the EU makes more frequent use of MFN clauses in FTAs than its trading partners in Asia—with the exception of China. While we observe no clear regional variants of MFN obligations, the trend to include MFN clauses in FTAs—especially in the services and investment chapters—reveals governments’ growing interest in safeguarding their exporters’ interests against third party competition in as many ways as possible. However, as we show, the strategic potential of MFN clauses remains uncertain as there is so far no evidence of active monitoring or enforcement of MFN obligations between trade partners.]

Published: Feb 5, 2022

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